Buy, sell or renovate? Part 3: Renovating

If you love where you live, but the house doesn’t quite meet your needs, renovating can be a great way to get the home you want without the costs of selling/buying.

TV shows like ‘Love it or List it’ have given us a new perspective on how you can transform your current home to make it a ‘forever’ home, not just a ‘for now’ home.

The good news is, you’ve already saved money by choosing to renovate. The entry and exit costs of selling and buying can feel like a waste of money.

When selling, you’ve got to consider the real estate agency fees, advertising costs, furniture styling costs, legal and packing/moving costs. You might also have break costs on services like Foxtel, internet, electricity etc if you aren’t transferring the accounts.

And when you’re buying, you’ve got stamp duty, government title transfer charges, Lenders Mortgage Insurance (LMI) if you don’t have enough of a deposit, conveyancing costs and packing/moving costs.

Depending on the house you’re buying or if you’ve got friends who can help you move, you’re about $3,000 to $5,000 in front by renovating.

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Builder costs – Cost-plus vs fixed price

If you aren’t a DIYer, it’s likely you’ll need a builder or a few trades to do the work. So, how do you arrange a quote that won’t blow your budget later on? Generally speaking, there are two options; cost-plus and fixed price contract.


Builders generally prefer a cost-plus situation, whereby the builder has a set percentage as their builder’s margin and that is added to the cost of the materials and subcontractors. The builders margin generally ranges from 6% to 25% - the huge range is dependant on the size of your job and also how much the builder wants the job. 10% is a reasonable builder’s margin for a medium sized renovation or extension. Anything more, you should find out why they charge more. They may have more awards or specialise in architectural jobs or the location you’re building in has builders in higher demand, whereby they can charge more.

The builder will then give you 2-3 quotes for each required subcontractor for approval. This gives you the ability to control the costs, however don’t be afraid to get your own quotes if you think the builder is favouring their preferred suppliers or mates.

The builder will generally give you a rate per hour for any of their own trades, and you’ll pay for whatever hours they work on the job. The builder will tell you who needs to be on site and for how many hours so keep in mind the hourly rates for trades. A general guide is;

Project Managers $90 to $120 per hour + GST

Site Manager $70 to $110 per hour + GST

Carpenter $50 to $80 per hour + GST

Apprentice $35 to $55 per hour + GST

Pros of a cost-plus arrangement

  • You can review quotes before committing to the work

  • You can reduce costs by reducing material costs

  • Cost-plus can be cheaper than a fixed price contract where the hidden margin is generally higher

Cons of a cost-plus arrangement

  • Labour costs can blow out if the builder’s trades are slow workers or there are structural surprises that haven’t been costed for

  • Finance is difficult to secure and a cost-plus arrangement is generally only suited to someone with the cash to fund the entire renovation

  • It’s difficult to budget a final figure for the renovation as there are too many variables and often the work is quoted throughout the renovation process, potentially leaving the renovation half complete if money runs out.

A ‘top up’ loan is a common term used within the banks whereby the borrower accesses the equity in their property to increase their borrowings.
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Fixed price contract

A fixed priced contract is exactly that, a contract that has a fixed price for the work. Generally, a builder will incorporate a 15-20% builder’s margin into the contract to allow for any time or material cost variations. This buffer ensures that the builder isn’t out of pocket if the job takes longer or material prices like steel increase between quoting and purchasing.

For those looking to finance the renovation, a fixed price contract is the best option as you’ll have a detailed contract stipulating the work involved that the bank can value accurately. However, you need to make sure you include everything you need/want in the contract as you’ll need to pay more via a ‘variation’ contract if you’ve missed something.

Pros of a fixed price contract

  • The price is fixed and you are able to budget for the completed renovation

  • You won’t need to fund the renovation in cash as you’ll have a better chance of securing finance from a bank, assuming the valuation stacks up and you aren’t over capitalising on the property

  • You have a detailed contract stipulating what is included and what isn’t

  • Often a fixed priced renovation is quicker as labour costs have already been included

  • Often sections of the renovation is broken into separate costs so you can easily remove/reduce items from the renovation if you need to reduce total costs

Cons of a fixed price contract

  • You need to make sure everything is included in the contract as missing items will incur additional costs

  • You need to decide on your inclusions and fittings earlier to ensure they are included in the contract

  • The cost might be slightly higher than a cost-plus arrangement but the risks of budget blow outs or running out of cash is much lower

  • If the bank is paying the builder for each progress payment you need to make sure you give the bank the invoice quickly to avoid the builder stopping work due to payment delays.

  • You may need to get a certifier to review the work prior to the bank paying the progress invoice

Whether it be a new swimming pool, deck or extension, a fixed price contract is the best way to secure funding for your renovation or extension.
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Designing your renovation

TV shows and professional renovators like Three Birds Renovations can make it look easy, but the reality is not everyone is an architect or interior designer or have sponsored suppliers. Depending on the scale of your renovation, you can engage some professional help from an architect, drafter or interior designer, or if you want to go it alone to keep costs down, here are a few websites and tools to help.

This free online floor planner software is pretty easy to use and will help you get your layout and measurements right. There are how-to videos to show you how to recreate your floor plan. We love that you can upload an existing floor plan or to scale hand drawn floorplan and trace over the plan. The 3D camera means you can do a walk through of the space and get a feel for your design. It has a huge database of furniture and fittings to give you a realistic look. The free version does have limited export options so if you want a PDF version, you’ll need a paid subscription.


If you need some inspiration for design ideas, Pinterest is the best resource. The quality and quantity of interior design images are brilliant, and you can create your own ‘boards’ or folders to keep similar photos in. Pinterest is free and easy to use and you can keep your boards private if you want.

Our tip is to also save photos of layouts or design ideas that you don’t like. Sometimes explaining what you don’t want to a builder can help reduce design errors later on. Photos are the best way to communicate exactly what you want, and don’t want in your home. Don’t forget to follow the Mint Equity Pinterest boards for inspiration.


Slightly different to Pinterest, Instagram is a great way to get inspiration but also follow the companies or suppliers you want to use in your renovation. You’ll have a visual database of products you like and links directly to the people who supply the products. It’s also a great way to communicate directly with the suppliers and get more info on the products. You can also follow a hashtag like #interiordesign or #hamptons and your daily feed will include images tagged with those hashtags. Don’t forget to follow the Mint Equity Instagram page for inspiration.

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Financing your renovation

If you don’t have enough cash to fund your entire renovation or want to keep your cash aside for furniture and styling items, you can borrow to fund the renovation. Working with an experienced mortgage broker like Mint Equity will enable you to review your options to access the equity in your property. Whether it be a new swimming pool, deck or extension, a fixed price contract is the best way to secure funding for your renovation or extension. If required, you’ll need your council approved plans and a quote from the builder or supplier. This will form part of the application to borrow the money to complete your renovation.

‘Top up’ loan

A ‘top up’ loan is a common term used within the banks whereby the borrower accesses the equity in their property to increase their borrowings. For example, if the value of the property is $800,000 but the owners only have a loan of $550,000, there is $250,000 in equity. However, unless you want to spend money on Lenders Mortgage Insurance, it’s best to keep the LVR (Loan Value Ratio) under 80%. 80% of $800,000 is $640,000, which means the borrower can ‘top up’ by up to $90,000.

As each lender is different and has different requirements for a ‘top up’ loan, it’s a good idea to speak with your mortgage broker about how much more you can borrow before you start planning your renovation. That way, you’ll know exactly what your budget is and avoid disappointment later on.