When you think about a renovation project, images of knocking down walls, council permits and months of inconvenience might spring to mind. But a renovation project doesn't always have to be big – it really can be anything from upgrading a kitchen or installing a pool, to building a granny flat.
Whatever the scale of your renovation project, chances are you'll need to finance it, unless of course you've had a big win on the lotto.
You have two main options if you choose to finance through a lender:
- A personal loan - which is unsecured
- Mortgage finance - secured on the property
The right option for you will depend on the scale of the renovation and your financial situation. Loan Market brokers take the time to understand the ins and outs of your renovation goals. And, because they understand different lenders' criteria (and who's approving quickly) they can work to get your finance organised fast so your renovation plans don't come to a halt before you've drilled the first hole.
A personal loan can be a good option for small renovation projects, such as fitting a pool, where the cost is fixed in advance. You can pay off the balance earlier than you would by adding extra to your mortgage – typical personal loan terms are three to five years. And, with a personal loan, you'll have fixed regular repayments enabling you to build in the cost to your budgeting. But on the downside a personal loan can attract a higher interest rate than a mortgage and the qualifying criteria can be stricter.
You can finance your renovation project through a mortgage, in two ways. The first is releasing equity you have in your home and the second is taking out a new loan.
You'll have equity if your property is worth more than you paid for it, or because you've paid down a good chunk of the existing loan. The equity acts as a security and your existing lender tops up your loan.
The other option is to refinance your entire loan with a new lender. The new loan amount would cover your existing loan and the cost of your renovation project. As a bonus, you could end up getting a lower interest rate. Because Loan Market brokers work with over 30 lenders, they know how much each lender will be prepared to lend you, based on your circumstances.
Remember - renovations can add value
Don't let the complexity of organising finance get in the way of your renovation goals. Because, in many cases, renovations can add value to your property above and beyond the cost. And we'll do all the legwork for you anyway, leaving you to simply review and sign.
Loan Market brokers help thousands of Australians every year with the finance needed to get their renovation project off the ground. We know who is approving quickly and the information they're asking for so you're not left waiting with renovation plans that you can't put into action.