Updating your home doesn't have to cost a small fortune, in fact sometimes it's the smallest renovations that can make the biggest difference to your living space. Here's a step-by-step guide to maximising the capital in your home, on a minimal budget.

1. Plan
If you're reading this then you're possibly at a stage of renovation planning that involves having towers of home magazines around your place and colour swatches stuck to most of the walls. Or you're a future home owner (yet to have a mortgage) that can't wait to get hold of a tape measure and get to work.

Either way, devising a plan for your renovation goals will keep you on track and on budget. It's now that you'll be considering the logistics of your renovation project and asking questions such as: Can I DIY or do I need some help? Do I require approval from a body corporate or council before I go ahead? And how long will the project take to complete? Once you've answered these questions it's time to pull out the calculator and start crunching the numbers.

2. Budget
Most real estate experts would advise against spending more than 10 percent of the value of your home on renovations, to avoid overcapitalising on your property. For instance, if your home is valued at $300,000, the most you would allocate to your renovation kitty may be around $30,000.

However, a new bathroom, kitchen and all-over lick of paint may set you back more than $30,000, so you might need to downsize your goals. Instead, refresh your kitchen by replacing the cupboard doors or even just the handles for a brand-new look in your cooking space, for instance.

3. Finance
Once you've determined your goals and settled on a budget, the next step is to decide on the best financing option to suit your projects. Whether it's a personal loan, credit card or even a home equity loan that you use to fund your renovation projects, there are hundreds of financial options to choose from listed on RateCity, many which will save you thousands of dollars.

In the case of a personal loan, the current average variable rate is 12.16 percent (as of March 30, 2011). But there are many more expensive options, including the ANZ Variable Rate Personal Loan at 15.15 percent. By selecting a rate near the market average for a $30,000 loan you'll save almost $3000 over five years, compared with the ANZ option, so it really pays to shop around.