Do you need more living space? Is your floorplan outdated and in need of an overhaul? If you’re considering a home extension, Melbourne’s Duncan Thompson Extensions is here to help. With over 30 years of experience in designing and creating bespoke house extensions, we can help you bring your vision to life! While choosing paint colours, tiles, and tapware is an important and exciting part of the process, it’s also vital to look beyond just aesthetics and pay attention to your budget and finances.
We are often asked for advice on budgeting appropriately and ways to finance a home extension so here we will give you some helpful advice to make your journey to a bigger house a little smoother.
Understanding House Extension Costs
For effective budgeting and planning, it’s important to have an understanding of the costs involved in a typical home extension. On average, you can expect to pay between $1,500 to $3,000 or even more per square metre for a standard home extension. This usually includes construction costs but may not encompass additional expenses such as permits, design fees, or landscaping so it’s best to factor in these potential costs when creating your budget.
In addition to basic construction costs, you should also consider other financial implications. For instance, if you are extending your home and including multiple new bathrooms, a larger kitchen and spaces that require lots of plumbing or electrical work, these installations will add to your overall expenses. Furthermore, engaging an independent architect or designer can enhance functionality and aesthetics but will also increase initial outlays.
It’s also wise to account for potential disruptions during construction. While some projects may be completed quickly, others could take several months depending on their scope and any unforeseen challenges that arise.
Key areas to consider for budget allocation:
- Design and Planning Fees – This can include hiring architects or designers who will help create plans that comply with local regulations.
- Materials Costs – The choice of materials significantly impacts your budget. Consider the quality and type of materials you wish to use, as this will affect both initial costs and long-term maintenance.
- Labor Costs – Hiring skilled labour is crucial for the success of your extension. Obtain quotes from various builders, ensuring they are reputable and experienced in similar projects.
- Permits and Inspections – Depending on where you live, obtaining necessary permits can incur fees that should be included in your budget. Additionally, inspections may be required at different stages of the project.
- Contingency Fund – It’s wise to set aside a contingency fund – typically around 10-20% of your total budget – to cover unexpected expenses that may arise during construction.
- Interior Finishes – Don’t forget about the interior! Budget for flooring, painting, fixtures, and furnishings that will enhance the overall look of your new space.
It’s essential to distinguish between what you need versus what you want in your extension plans – Prioritising essential features will help keep your budget on track while allowing for upgrades if finances permit.
Also, many homeowners attempt to navigate budgeting without consulting professionals such as architects or builders. The expertise from an experienced home extension builder can provide insights into realistic costs and potential pitfalls, helping you create a more accurate budget!
Different Financing Options for Home Extensions
There are several pathways you can explore to fund your home extension or renovation project.
Home Equity Loan – This option allows you to borrow against the equity you’ve built in your home. It typically offers lower interest rates compared to personal loans because it is secured by your property, however, it’s essential to assess whether taking on more debt aligns with your long-term financial goals.
Remortgaging – If you have a favourable mortgage rate, remortgaging could provide additional funds for your extension while potentially reducing monthly payments. This involves taking out a new mortgage that covers the remaining balance of your current mortgage plus the amount needed for the extension.
Construction Loan – Designed for people who are building a new home, a first floor addition, ground floor extension or doing large scale renovations, it has a different structure to loans designed for people buying an established or existing home. A construction loan most commonly has a progressive drawdown, meaning you receive instalments of the loan amount at various stages of construction, rather than receiving it all at once at the start. You generally only pay interest on the amount that is drawn down, as opposed to on the whole loan amount.
Personal Loan – For those who prefer not to use their home as collateral, personal loans are an alternative option. They usually come with higher interest rates but offer flexibility in terms of repayment periods and amounts borrowed.
Savings – Utilising personal savings is often the most straightforward way to finance a home extension without incurring debt. While it may take time to save up enough funds, this approach ensures you won’t have monthly repayments hanging over you post-construction.
Each of these options comes with pros and cons, so it’s important to evaluate them carefully based on your financial situation and project scope before making your choice.
Are You Ready to Start the Home Extension Process?
If you need more advice, or you want to take the leap and begin the home extension process, reach out to the team at Duncan Thompson Extensions today. We’ll collaborate with you to determine what will work best for your specific needs and budget. We are here to answer your questions and help you achieve the house you have always wanted. From concept to completion we take the stress out of extending – we handle everything so you don’t have to.
Careful planning, the right financing option, and an industry-leading extension builder – it’s easier than you think to turn your vision of a dream home extension into reality.
Call 9836 8655 to get a quote for single or double storey house extensions. Melbourne clients can trust us to deliver the best result, on time and on budget.
