How to fund a complete house renovation?

[JSnowWinterfell]

It would be useful to have a key post on the topic of funding house renovations, I have not found any 'howto' guides that go into the details of funding.

I was watching a repeat of Room to Improve, in this specific episode, the family purchased a home needing a gut renovation for 400k, and had a budget of 230k which was to be funded by the sale of their current home, which appeared to be sold post they moved into the newly renovated house. As seems the norm for all type of renovation shows the project went over budget and the actual renovation spend was 300k. This additional 70k is a substantial amount of money to source in a relatively short period of time. Everybody's situation is different but given that it is not uncommon for gut / major renovations, it got me wondering the options to fund a renovation.

The major question is options for the generating 300k renovation budget, and my questions are:

1. What percentage of the tender quote do builders require upfront? and how is the balance paid, e.g. monthly, on completion?
2. 230k initial budget funding Options
   1. Cash Savings
   2. Mortgage - I assume no lender will give you a mortgage against the future value of the house, but can they give you an additional loan at mortgage rates for the renovation? In terms of mortgage approval for houses needed gut renovations does the borrower have to show proof of funds for
   3. Mortgage Top Up - Would a mortgage lender allow you to top up on your existing property and use the funds towards the renovation of another property?
   4. Remortgage - Requires you to have a significant amount of equity in your current property.
   5. Short Term Personal Loans - Borrow at 6-7% over 5 years to
   6. Other financing options?
3. 70k Overbudget
   1. Additional Savings / safety nets
   2. Short Term Bank Loans

Interested to hear peoples opinions or those who have actually funded a renovation and the approach they followed.

 

[David_Dublin]

Not sure on the above, but in relation to "over-budget", I would definitely not go ahead unless I had a pot for contingency.

Lots of differing opinions on how much is enough. Probably depends on the complexity of the build to some extent. Also on the known unknowns, or likelihood of things cropping up. Extensions, older houses, conversions are presumably more risky. Another factor is being able to stick to the plan and not make changes on an ongoing basis, and have reasonable PC sum values that you try to stick to. A good QS is very worthwhile from what I have heard.