How to Budget For a Home Renovation

Tearing down walls and building a new dream space can be exciting, but home renovations are notorious budget-busters.

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Before the first sledgehammer swings, you should carefully plan a realistic budget to avoid financial headaches down the line. Check out these helpful tips to equip you with the tools you need to create a solid home renovation budget that keeps your project — and finances — on track.

How Do You Begin to Plan a Budget for Your Home Renovation Project?

Your first step is to identify your priorities. Make a list of everything you want to achieve with your renovation, and be honest about what's necessary and what falls under wishful thinking. Prioritize your must-haves and consider if the nice-to-haves are things you can tackle in a future phase when your finances are stronger.

Once you have a clear vision, do some research. Explore online resources and magazines to get a general idea of typical costs for different renovation elements. This gives you a starting point to build your budget. According to Architectural Digest, this is what you can expect to pay for different rooms in your home:

• Kitchen: $10,000 to $50,000 (CAD 13,591 to CAD 67,953)
• Bathroom: $9,000 to $20,000 (CAD 12,232 to CAD 27,181)
• Bedroom: $10,000 to $15,000 (CAD 13,591 to CAD 20,386)
• Living room: $5,000 to $10,000 (CAD 6,796 to CAD 13,591)
• Dining room: $2,000+ (CAD 2,719+)
• Attic or basement: $12,300 to $33,300 (CAD 16,717 to CAD 45,257)
• Garage: $3,000 to $15,000 (CAD 4,078 to CAD 20,386)

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How Do You Estimate the Costs of a Renovation Project?

While online resources provide a good starting point, you need to get quotes from qualified contractors for a more accurate picture of costs in your area. Get estimates from several contractors to compare pricing and the range of services offered.

Be sure to get everything in writing. A reputable company will give you a detailed breakdown of labor costs, material prices and potential demolition or removal fees. Don't be afraid to ask questions and clarify any uncertainties you may have about the costs involved.

Here's a breakdown of some key expenses to consider:

• Materials: Flooring, cabinets, countertops, appliances, plumbing fixtures and lighting, etc.
• Labor: This should include the contractor's fees and the cost of hiring subcontractors such as electricians, plumbers and carpenters.
• Demolition and removal: All potential costs associated with removing unwanted fixtures, walls and floors.
• Permits and inspections: Depending on the scope of your project, you may need to factor in permit fees and inspections from your local building department.

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Don’t Forget to Budget For Unexpected Expenses

You know what they say about best-laid plans? Murphy's Law applies to renovations, too, so it's wise to include a buffer in your budget for unexpected expenses. A good rule of thumb is to allocate five to ten percent of your total budget for contingencies. This helps you weather any surprises during the project, such as discovering hidden structural issues or needing additional materials.

Set Aside Cash for Alternate Housing While the Project Is Ongoing

This depends on the extent of your renovation and your living situation. A bathroom remodel might be manageable while living in the house, but a whole home renovation usually means finding temporary accommodations. Factor in the cost of renting an apartment, hotel stays or moving in with family while the project's ongoing.

What Other Things Should You Factor Into Your Home Reno Budget?

Remember, the goal is to be realistic. It's tempting to underestimate costs, but padding your budget in key areas will prevent financial stress and ensure a smoother renovation experience. Remember these items:

• Cost of hauling away construction debris
• Possible suspension of utility services at your home
• Rental of a storage unit to house furniture and belongings during the renovation
• Extras such as paint, hardware, window treatments and decorative elements to complete your renovation

Beyond the Budget

A well-defined budget isn’t the only factor to consider. Focus on these as well:

• Avoid cutting corners on quality materials or skilled labor, because investing in both ensures your renovation lasts longer and adds value to your home.
• Decide during the planning stage, depending on the scope of your project, whether you need to explore financing options such as home equity loans or credit lines.
• Maintain clear and consistent communication with your contractor, discussing any changes or concerns promptly to avoid costly surprises.

All CAD conversions are based on the exchange rate on the date of publication.