The importance of getting finances in order for large scale renovation projects

If you are about to embark on a major property renovation project, there are a number of tips you should be aware of to help ensure everything goes according to plan.


The majority of renovation projects go wrong as a result of inadequate planning, so before you even think about making a start, spend some time checking every last detail of your plans and costings.

Your first task is to set a budget; only you know how much you can afford to spend. Having arrived at a maximum figure, deduct between 10% and 20% to retain for contingencies. Many renovation projects have a tendency to overrun, so it pays to keep a little spare cash in hand.

Next, identify the precise scope of the project and have an architect or similarly qualified professional prepare a set of detailed drawings; apply for and secure planning consent, and prepare an estimate of the total cost. It may be the case that you have to compromise on the quality of materials used or some aspect of the design in order to stay within budget; never be tempted to opt for higher spec fittings or materials than you can afford.

If you possess the necessary skills, carrying out some of the work yourself will save money.

Sources of funding

Having costed the job, you could choose to wait until you have sufficient savings before commencing work. This is likely to be the cheapest form of funding, though material and labour costs may increase in the intervening period. In the current economic climate, however, with low interest rates and only minimal price and wage increases, this should not be too much of an issue.

Remortgaging is the preferred and most cost-effective form of borrowing, though you should check if there are any penalties for repaying either part or all of the loan early; for example, if you sell the property. The amount you can borrow depends on the equity you have in your property. There are lots of banks and building societies offering remortgage deals, as you will soon discover by carrying out a quick search for mortgage lender comparison websites.

If you are a first-time homeowner and the property is habitable you should be able to secure a loan of around 80% of its value less a retention, which is held until the renovation work is completed. The lender will have the property inspected before releasing this retention, so you will have to source additional funding elsewhere.

In cases where the property is not in a habitable condition there are several specialist mortgage providers that release funding in stages as the renovation progresses. The work is assessed by surveyors at specified points in the construction process, and when complete the property may be remortgaged, releasing funds to repay any other loans that have been taken out; for example, on credit cards.

Taking out a personal loan is one of the most expensive options available, but if you have no other means of financing a proportion of the work, this may be your only solution.

One final point: be absolutely certain you have all the necessary finance in place before you sign any contracts or start knocking walls down.

Related Post