Renovations nearly always cost more and take longer than planned. So how you pay for one matters as much as the design. This article covers where renovation money can come from in Indonesia, how to put together an honest budget, and how to pay a contractor so your money does not run out before the work does.
Start With the Scope
Before choosing how to pay, be clear on what you actually want done. Repainting, retiling, or fixing a ceiling is light work that savings usually cover. Adding a room, building a second floor, or raising the floor level is heavy work that needs serious money and some technical planning.
In Banjarmasin and the surrounding area, raising the floor is a common job. Streets get built up over the years, so a house that once sat level with the road ends up lower than it and takes in water during heavy rain or high tide. That kind of work touches the structure, so it deserves a proper budget, not a builder’s rough guess.
Renovations that change the structure or add floor area may also need a building approval (Persetujuan Bangunan Gedung, PBG). Ask the local office before you start. Our article on PBG, the replacement for the IMB permit explains it.
Where the Money Can Come From
Savings or cash
The simplest route, with no interest. You set the schedule and do not wait on a bank. The downside is that your emergency fund can get swallowed if costs run over. Ring-fence an emergency fund before you spend savings on a renovation.
Mortgage top up
If you are still paying off a home mortgage (Kredit Pemilikan Rumah, KPR), some banks will lend you extra on top of the remaining balance. Since the collateral is already registered with that bank, the process can be shorter. The bank will usually look at your repayment history and revalue the house. Keep in mind that a top up adds to what you owe and can stretch the term.
Multipurpose loan secured on your certificate
For a house you have paid off, a multipurpose loan with the certificate as collateral is a common choice. The limit can be fairly high because the house itself backs it. The risk is that your home is on the line if repayments stall. How these loans work and what to read in the contract is covered in borrowing against your property certificate.
Dedicated renovation loans
Some banks have renovation products that release money in stages as the work progresses. That actually helps keep spending on track, since the funds cannot drift to other things. Ask your bank whether this is available and what documents it wants, typically drawings and a bill of quantities (Rencana Anggaran Biaya, RAB).
Unsecured loans and credit cards
Unsecured personal loans and credit card instalments pay out fast, but the interest is generally much higher. Use them only for small, short gaps, not to fund a major renovation.
Building an Honest Budget
A good budget starts with a written RAB, not a per square metre figure from a conversation. Ask the contractor to itemise the work: demolition, structure, walls, roof, electrical and plumbing, finishes, and labour. With that breakdown you can compare two or three quotes fairly.
Things people tend to miss:
- Demolition and debris removal. Often left out of the first quote.
- Hidden damage. Rotten timber, termites, or leaking pipes only show up once things are opened up.
- Somewhere to live meanwhile. A big job may mean renting another place for a few months.
- New furniture and fittings. Wardrobes, lights, and curtains are often not counted.
- Contingency. Many people set aside around ten percent of the budget for the unexpected.
For a rough idea of costs by component, estimating the cost of building a house is a good starting point. For smaller jobs on a tight budget, see budget renovation ideas.
Paying the Contractor in Stages
The renovation horror story you hear most often is a contractor who disappears after collecting a big payment. The best protection is to pay against progress.
A common pattern:
- A small advance to buy initial materials and bring the crew on site.
- Stage payments tied to milestones you can see, for example when the structure is done, when the roof is on, and when the wiring and plumbing are finished.
- Final payment after handover, once the snag list has been fixed.
- A retention, a small share of the contract value held back until the maintenance period ends, to make sure cracks or leaks that appear later get fixed.
Write all of this into the contract along with drawings, material specs, schedule, and late penalties. If your loan pays out in stages, line up the contractor’s payment schedule with the bank’s so no stage stalls waiting for money. Tips on picking a builder are in choosing a home contractor.
If you buy materials yourself, keep receipts and photograph deliveries as they arrive. That makes it easy to check if quantities or quality fall short.
Try to visit the site regularly, at least once a week, and photograph progress from the same angles each time. That record helps when a stage payment falls due, when you and the contractor disagree, and when the bank asks for proof of progress before releasing the next tranche.
Check What You Can Afford
Before borrowing, add the new instalment to every repayment you already have. The bank will run the same sum, and you need to be sure there is still room for daily life. A more comfortable home is not worth much if the repayments squeeze you every month.
Ask yourself too whether the renovation adds value. Raising the floor in a flood-prone street or fixing a leaking roof usually pays off. Putting luxury features into a house in a modest neighbourhood often does not come back when you sell.
Wrapping Up
Match the funding to the size of the job, write a proper RAB with a contingency, and pay the contractor against progress you can see. Those three habits cut the risk of a half-finished renovation a lot. If you are weighing up whether to renovate or move to another home in South Kalimantan, the Vorneo Property team is happy to talk it through.
