How to save money on house renovation costs

author-avatar By on July 31, 2019
How to save money on house renovation costs

Image by via Adobe Stock

Amid the recent falls in house prices around the country, many people are deciding to hold off from selling their properties and opting to renovate instead.

Adam Rigby, property expert and founder of Upside Real Estate, says now is a good time to make small improvements to your home if you are considering selling. “There’s a sliding scale of how much value you can create versus how much you spend,” Mr Rigby said. “It’s no secret that styling your property pays off: our real estate agents estimate that it adds around 2.5% to the value of your home and it can also help your house sell faster.”

While you may have dreams of a major house renovation, your bank balance probably has other ideas. Renovating your home is always going to make a dent in your savings, but there are ways to save money on house renovation costs. 

House renovation cost

The average Australian spends around $25,000 on house renovations, according to the Australian Bureau of Statistics (ABS), while the average home renovation costs between $600 to $2,700 per square metre. If you’re on a shoestring budget or simply want to save money, these cost-cutting tips could help you save money on the costs of your home renovation. 

How much does it cost to renovate a kitchen?

The average cost of a kitchen renovation in Australia is $24,000 according to the Housing Industry of Australia’s Kitchens and Bathrooms Report 2019/20.

How much does it cost to renovate a bathroom?

The average cost of a bathroom renovation in Australia is $19,000 according to the Housing Industry of Australia’s Kitchens and Bathrooms Report 2019/20.

How much does a renovation add to home value?

As a general rule, it’s best not to spend more than 5% of the value of the home on renovations to avoid overcapitalising.

Renovations generally add up to 10% to the value of your home. So for a house worth $500,000 a good renovation could add an extra $50,000 to the value of your home. Kitchens and bathroom renovations generally add the most value to your home, as these are the rooms that sell houses.

Is it cheaper to remodel or build a new house?

The cost per square metre of a new build is generally cheaper than the cost per square metre of a renovation. This is because renovation costs can be harder to predict, particularly if there’s asbestos, electrical rewiring, pests or major structural work that needs to be done. The costs of upgrading an older home can be significant.

According to BMT Tax Depreciation Quantity Surveyors, the average cost to build a brand new standard three-bedroom home is $1,600 per square metre.

The average cost to renovate a standard three-bedroom house in Australia is between $2,000 to $2,500 per square metre according to Renovation Junkies.

How to plan your home renovation

The first thing to do is work out a plan for your renovation, including designs and sketches, a list of needs and wants, DIY jobs and jobs for the professionals, etc.

Then work out the budget. Don’t forget to build in a contingency for any unexpected costs that are likely to pop up. Remember, it’s considered best not to spend any more than 5% of the value of the home on the renovation to avoid overcapitalising.

Next, you’ll need to hire your team. Shop around and get several quotes from contractors and builders, and make sure they have a contracting license, liability insurance and good reviews from previous clients.

Then you’ll need to sit down with your contractor and work out how long the project will take. Be sure to allow time for materials to be shipped and factor in demolition time and public holidays.

Finally, it’s time to prepare the space for the renovation. Pack up your belongings and move them somewhere else so you have a blank canvas ready for demolition.

How to save money on home renovations 

Renovation expert Cherie Barber has been working with Allianz Australia to provide tips for doing up your house on a budget. We spoke with Ms Barber and Mr Rigby to discover their cheap renovation ideas. 

1. Refurbish and re-use

Avoid budget blowout by working with what you’ve already got. Ms Barber recommends painting over old tiles to give them a modern look instead of ripping them out and replacing them with brand new ones.

“Tiles are something that will eventually date, even when they’re still in good condition, and they can be expensive to replace. It’s a cheap, easy DIY solution for updating those old beige ‘70s tiles. Alternatively, you can bring professional tile resurfacing companies in but that will cost you substantially more,” she told

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Pictured: Cherie Barber. Image supplied.

Kitchens can be one of the most expensive parts of the home to renovate, but there are cost savings to be had. “Why rip out a perfectly good kitchen, when the only problem is the drab, dated colour scheme? If the carcasses and doors have still got plenty of life left in them, then just choose a modern tint and get busy on the door fronts. Be sure to update the handles or knobs at the same time,” Ms Barber said. If you can’t afford new furniture, Ms Barber says ‘up-cycling’ your old furniture can save substantial amounts of money. “A scruffy timber coffee table can be sanded and varnished, so it comes up like new. And a coat of paint can give any old furniture, like a bookshelf or side cabinet, a completely new personality.”

2. Don’t move the plumbing

If you’re planning a bathroom renovation, make a major saving by sticking with the original plumbing points. Moving anything involving electrical or plumbing fixtures will cost considerably more and blow out your reno budget. You can still upgrade everything – the key is to keep all the facilities in the same spot. The same applies to kitchen and laundry facilities. 

3. Cheap cosmetic fixes

If your budget doesn’t quite extend to making structural changes, simple cosmetic changes such as installing new lighting or changing the window furnishings can instantly make your home feel new.

“Old kitchens often have just one central light in the ceiling (often an oyster light) which isn’t a pretty or effective one at that. Depending on your budget, LED down-lights or track lighting is a neat, practical replacement. You can also install over-bench feature lighting and perhaps a trio of cool pendant lights over your breakfast bar or island bench. In a kitchen you ideally want a mix of general ambient lighting, task lighting and some feature lights,” Ms Barber said.

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You can also make a big impact through affordable updates like paint. “For renovators, it’s liquid gold. If your kitchen is part of an open-plan layout, then you want to paint your kitchen and living spaces the same colour so the rooms flow seamlessly together. Always get a sample pot and paint generous swatches that you can view in daylight and night before you commit to ordering all your paint,” Ms Barber said. 

4. Improve the layout

You can make some structural changes without completely blowing the budget – the key is to avoid load-bearing walls.

“If there’s a simple gyprock or non-load-bearing wall boxing in your lounge room (separating your lounge room from an adjoining kitchen or dining room), simply removing a wall or two, can open up all your living spaces. Creating open-plan living is one of the key ways to add value. Once complete, ensure your home and/or contents insurance policy has been updated. This is a part of the process that many renovators forget, however, could save you money in the long-term,” Ms Barber said.

Ms Barber says even smaller cosmetic changes can make a big difference to the layout. “It might be a matter of installing extra overhead cupboards or shelves; extending the kitchen with new floor cabinets, and perhaps installing longer benchtops. If it works within the space, a breakfast bar or island bench is a great value-add.” According to Mr Rigby, the power of mirrors should not be underestimated. “Mirrors are an inexpensive way to instantly give a feeling of space to a room. Try placing a mirror behind the sofa, or shelf in the living room, or behind the headboard in a bedroom. In dark hallways, they are a great way to add space and open up the walkway.”

5. DIY vs tradies

There are some jobs you really should leave up to the professionals – like waterproofing, electrical work or plumbing. But there are some jobs that don’t require any special skills, like painting or ripping up carpet. If you can pull in some favours from friends and family, you can significantly drive down the cost of your home renovation. 

6. Use cheaper materials

Swapping to more affordable materials is an easy renovating win. It will save you money and it doesn’t have to affect the overall aesthetic of your renovation. 

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“You can do this very cheaply with products like water-resistant laminate floorboards or vinyl floor planks which quickly disguise old tiles or lino. These products mimic the look of real timber floorboards but are quicker, easier and less expensive to work with. They’ll instantly modernise any home,” Ms Barber said.

If you can’t afford a marble or granite benchtop, laminate or engineered stone can look just as good – and for a fraction of the price. 

7. Build a contingency into your budget 

If you’ve ever watched Love It or List It (or any home renovation show, let’s be honest) you’ll know that unexpected costs are an unavoidable part of the renovation process. Hidden damage such as asbestos, mould, shoddy wiring, rotting wood and termites can be costly, which is why it’s important to build a contingency into the budget to cover any unwelcome surprises. You never know what can arise during a project – particularly if you’ve got an older home. 

Unexpected delays can also occur, like a holdup in materials arriving or bad weather, which can consequently cost money. Having a buffer in your budget to account for this means you won’t need to skimp on other areas.

Borrowing money for renovations

Unless you’ve got cash stashed away to fund your home renovation, you’ll have to explore other options to finance your project. We’ve rounded up a few different ways to fund your renovation project – depending on your situation and the extent of the renovation you’re planning.

Low rate variable home loans

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) owner-occupied home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

1. Unsecured personal loan

An unsecured personal loan is essentially a loan that can be used to finance whatever you like – be it a holiday, a car, or home improvements. Unsecured personal loans generally come with higher interest rates and fees than other loans because there’s no guarantee (security) on these loans, and they’re more risky for the lender.

2. Secured personal loan

A secured personal loan allows you to borrow money by putting up an asset as security for the loan. If, for example, you’re doing a home renovation, you can put up your home as security for the loan. If you have a mortgage, you can use the equity in your home as a guarantee (the amount of equity has to be more than the loan amount). 

3. Mortgage finance

If you’ve already got a mortgage, you could up your mortgage amount to finance your home renovation. If your mortgage has a redraw facility and you’ve made extra repayments, you may also want to consider using that to fund your renovations.

4. Construction loan

If you don’t have enough equity in your home, you may want to consider a construction loan. A construction loan is typically based on the estimated final cost (post-renovation) value of your property, which allows you to withdraw whatever amount you need in order to pay the latest renovation-related invoice that has come in. Keep in mind that construction loans are typically used for major renovations (such as adding new rooms or making big structural changes to the property) – not for minor cosmetic changes. 

Compare construction loans

Looking to renovate a home? The table below features home loans with some of the lowest variable interest rates on the market for renovation.

Costs of a home improvement loan

If you’re planning a renovation, there are a few different options when it comes to funding your project. There are personal loans, mortgage refinance, funds in your offset or redraw facility, construction loans or even your credit card.

Consider the upfront and ongoing fees as well as the interest rate when calculating the costs for a home improvement loan.’s two cents

When you’re renovating your home, chances are you won’t have an unlimited budget to play with. But renovating doesn’t need to be expensive – it just requires you to think outside the box. Start your renovation with a plan and a budget to avoid overspending on your home renovation.


The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure,, Performance Drive and are part of the Firstmac Group. To read about how manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Emma Duffy joined as a Finance Journalist in 2019 after spending a year as the editor of The Real Estate Conversation. She's passionate about empowering people to make smart financial decisions and improve the financial literacy of Australians by translating complex finance topics into understandable, relatable content.

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