Article Summary
- The first thing you need is a plan. It helps to have an architect help you draft up your plans for the renovations.
- Once you have a plan, you can set your budget. Be sure to set aside 10 to 20% for contingency costs.
- You can finance the renovations by drawing on home equity, which is the difference between the property value and what you owe on the home loan.
Reforging a home in your own image is every homebuyer’s dream. Finally, you get to make the home a special place geared toward the lifestyle of your family, while increasing its value in the process.
Whether you’re looking to renovate the kitchen (the heart of the home), the bathroom (a good way to improve the home on a budget), or the living room, these tips will help you plan the renovation.
What you need:
- A budget
- A plan
The Budget
- The budget depends on your plan.
- Once you’ve set out your plan, get cost estimates for the alterations you want to perform. You can research costs online but it’s better to do directly to the contractors and find out average costs.
- Building projects generally go over time and budget. Set aside at least 10-20% of your budget for contingency costs.
Estimated costs for renovations in South Africa:
- Basic renovation (repainting, replacing flooring and fixtures) — R50,000 to R150,000 (small house), R300 000 (larger house).
- Mid-range renovation (kitchen or bathroom remodels. replacing windows) — R150,000 to R500,000 (small house), R1 000 000 (large house).
- High-end renovation (swimming pool, installing a home theatre) — R500,000 to R5,000,000 depending on the size of the house.
The plan
- The importance of planning can’t be underestimated.
- Consider employing an architect to help you draft plans for the renovation.
- Make plans for kids and pets.
- Determine whether you’ll need to move during the project.
- Research the zoning laws governing your municipality.
Renovations that add value
Usually, the renovation caters to intended lifestyle changes, but the potential effect on home value should be taken into account as well, as much as you’d rather avoid the additional admin.
You can streamline this process by employing an estate agent. They can advise you on how the planned renovations will affect your home value.
Kitchen renovations are highly sought after as they achieve both lifestyle and financial aims by improving the heart of the home while boosting its value.
Kitchen renovation targets could include worktops, cupboards, electrical, plumbing and gas points.
Current costs in Cape Town puts the national average cost at around R210 000, though they break it down into more detailed price ranges:
- Small kitchen remodel: R10,000 – R150,000
- Mid-range kitchen remodel: R150 000 – R250 000
- High-end kitchen remodel: R250 000+
Financing the home renovation
A major factor in your plan will be how to finance the renovation. You have a couple of options available.
Home equity loan
- Home equity refers to the difference between the property’s market value and what you owe on your bond.
- This means your equity increases if the value of the property does. If you owe R1 000 000 on your bond and the property is worth R1 200 000, you have equity of R200 000.
- Drawing on home equity is referred to as refinancing your home loan, and can be used to cover other expenses aside from home renovations.
- You can apply for a home equity loan in the same way you apply for a home loan. The higher your credit score, the higher your chance of approval and the lower your interest rates on the home equity loan.
Personal loan
- Unlike the home equity loan, the personal loan is unsecured. meaning there’s no collateral.
- A personal loan is more straightforward and can be paid back over a short term, but a home equity loan will probably be required for major renovations.
- Applying for a personal loan is a more streamlined process than applying for other types of loans, but will still require a good credit score for approval.
So as you see, you have options available for financing your home improvements. Now you just need to plan those improvements in detail and draw up your budget, so you can avoid facing complications down the line.
After all, with your home being your most valuable asset and emotional investment, why wouldn’t you make every effort to ensure you have an idea of what you want to achieve, and the means to achieve it?
