If you don’t plan your renovation budget appropriately the process can become stressful and unpleasant. So before you start envisioning your dream space, I recommend determining how much you can afford to spend, and then breaking it down into sections so that you can figure out how much of your money needs to go into each part of the project. Then you can determine the quality of the finishes you can put in the finished space.
Some people will have enough money saved that they can pay for their renovation up front, while others will need to borrow some of the funds. If you’re planning to finance your renovation you’ll find there are some great products available that are appropriate for home renos, and because your home is an asset, most institutions have a series of options available. You may want to look at financing the renovation with a secured line of credit or perhaps roll it into your mortgage to ensure you get the lowest interest rate on the funds. The key here is affordable financing. Instead of putting things on a high-interest credit card you can use a home renovation line of credit that has a much lower interest rate. But whatever you choose you must remember that the total of what you’re going to spend MUST include the interest you will pay over the course of the loan. When you don’t factor in the cost of borrowing it can throw the total cost of your renovation off by quite a bit. I highly recommend speaking to someone at your financial institution about what options are available before you make a decision.
It’s impossible to say what any one renovation will cost. Your basement renovation can vary drastically in scope and price than that of your neighbor’s, so you need to consider the following:
Create a budget spreadsheet with the item/project, estimated cost, and actual cost. Before you start this will help you to figure out how your money will be distributed throughout the reno, and during the process it will help you to make sure you’re still on track budget-wise. If you find you’re not on track you can make adjustments as you work your way through the process.
When creating the spreadsheet and trying to determine the estimated costs you’ll need to do some research. Be wary of online renovation cost calculators because they’re rarely updated and they can vary wildly by a number of factors. Your best bet is to ask around and get a variety of quotes. Also, do your own research. Go to your local home improvement store and check out the prices of the various materials you’ll need.
Don’t forget to let your insurance company know about your renovations to ensure coverage during the reno period.