Borrowing to renovate

Depending on the scope of your renovation project, you could need anything from only a few thousand to over a hundred thousand dollars. If you already have an existing home loan, you may need to undertake a mortgage refinance to fund your renovations. Financing can occur in a number of ways.

Equity loans

Equity loans allow you to access the equity in your property to fund your renovation project. How much you can borrow is subject to the amount of equity you have built up in your property and other serviceability criteria, but as a guideline, even if you own your home outright you are likely to be limited to borrowing a maximum of 80% of the value of your property.

You can read more about equity loans in our section, access your equity.

Loan top ups

A loan top-up allows you to increase the credit on your existing home loan to fund your renovation. It essentially taps into equity you have already built up in your property and extends some of that amount back to you, avoiding the expenses associated with acquiring additional finance through other sources. Unlike an equity loan, you are generally not able to continue to draw your interest back up to an agreed level – if you find you require additional funds you will need to apply for a further top-up loan. If available, there may be a minimum amount you can borrow, usually around $10,000.

Renovation/construction loans

For major work, such as a large ground floor addition, you could be looking at costs of anywhere up to $330,000 (Source: Archicentre Cost Guide 2008). Work on such a large scale may require separate finance in the form of a renovation or construction loan. These loans pay out funds for the construction or major renovation of your property in stages, rather than as a lump sum like a more traditional residential home loan.

For more information on borrowing to renovate

For more information on financing a renovation or the home loan that is in your best interest, talk to your local mortgage broker. Or call us at any time on 13 LOAN or direct on +61 2 9249 3739.