Home Renovation Loan: Turn the House You Have into the Home You Love
What is a Home Renovation Loan?
Your home is likely your biggest asset, but does it suit your current lifestyle? Whether you are dreaming of an open-plan kitchen, an extra bedroom, or a complete modernized bathroom, funding the project is the first step. A Home Renovation Loan isn’t a single “one-size-fits-all” product; it is a category of renovation lending strategies designed to fund improvements.
Depending on the size of your project, this could be a remodel loan (typically a personal loan for cosmetic updates) or a strategic refinance for renovations (using your mortgage equity for structural changes). The goal is to provide the capital you need to add value to your property without draining your savings.
Key Benefits: Adding Value, Not Just Cost
Smart homeowners view renovation finance as an investment, not an expense.
Increase Property Value: Well-executed renovations (like kitchens and bathrooms) can increase your home’s value by more than the cost of the work.
Lower Interest Rates: By using equity to renovate, you can access funds at home loan rates (e.g., ~6%) rather than credit card rates (20%+).
Stay in the Location You Love: Avoid the massive costs of selling and moving (stamp duty, agent fees) by upgrading your existing home instead.
Flexible Access: With a line of credit or redraw facility, you only pay interest on the cash you use to pay trades, keeping costs down during the build.
Who Needs Renovation Lending and Why?
The right finance product depends entirely on the scope of your works.
The Cosmetic Updater: You are painting, replacing carpet, or installing new blinds. A fast home reno loan (unsecured personal loan) is perfect because it’s quick to approve and doesn’t require a bank valuation.
The Structural Renovator: You are moving walls, adding a second story, or extending the footprint. You need loans for renovators structured as construction facilities to handle council permits and progressive payments.
The Flipper: You buy rundown properties to fix and sell for a profit. You need short-term, flexible funding that allows you to get in, renovate, and sell quickly.
The “Forever Home” Builder: You have substantial equity and want to build the dream pool and deck. Refinancing is the smartest way to leverage your past mortgage repayments to fund your future lifestyle.
The Process: Equity vs. Personal Loans
Understanding the two main paths for home renovation lending is critical.
Option A: Using Equity (The Smartest Rate) If you have owned your home for a few years, you likely have “usable equity” (the difference between your home’s value and your mortgage balance).
Assessment: We value your property to see how much equity is available.
Top-Up: We increase your existing mortgage or add a separate “split” loan.
Funding: You access the cash via redraw or an offset account. Best for: Large projects ($50k+).
Option B: Personal Renovation Loan (The Fastest Speed) If you don’t have enough equity or just want a quick $20k for a kitchen update.
Apply: Simple online application with proof of income.
Approval: Funds deposited in 24-48 hours.
No Valuation: No need for a bank valuer to inspect the house. Best for: Cosmetic updates ($5k – $50k).
Eligibility & Application: Getting Started
Qualifying for loans for renovators varies by the product chosen.
Equity Route: You generally need to keep your Loan-to-Value Ratio (LVR) under 80% to avoid Lenders Mortgage Insurance (LMI). You must also prove you can afford the higher repayment.
Construction Route: If you are doing structural work, you will need fixed-price building contracts and council-approved plans.
Personal Loan Route: Focuses on your credit score and steady income.
Don't Move, Improve.
Why spend $40,000 on stamp duty and agent fees just to move to a different house? Invest that money into your own asset. Whether it’s a quick remodel loan or a major structural refinance, we help you find the capital to make it happen. Check your borrowing power today.
Top 5 Relevant FAQs Home Renovation Loan
What is the cheapest way to fund a renovation?
The cheapest method is almost always using equity to renovate. By refinancing or "topping up" your home loan, you access funds at mortgage interest rates (which are much lower than personal loans or credit cards). Spreading the cost over 25 or 30 years reduces the monthly repayment, although it can increase the total interest paid over the long term if you don't make extra repayments.
What is the difference between a "structural" and "cosmetic" renovation loan?
Banks view them very differently. Cosmetic renovations (painting, floorboards, new kitchen cabinets) don't change the structure of the house. You can usually fund these with a simple equity release or personal loan. Structural renovations (moving walls, adding rooms, roofing) require a formal "Construction Loan." The bank will need to see council permits and a builder's contract, and they will control the release of funds to ensure the house remains structurally sound.
Can I get a renovation loan based on the "future value" of the home?
Yes, but only with a formal construction loan. If you are doing major work, we can order an "As If Complete" valuation. This estimates what the house will be worth after the renovations. Lenders may lend up to 80% of this future value, giving you more budget to work with than if you just borrowed against the current value.
How fast can I get a remodel loan?
If you opt for an unsecured home reno loan (personal loan), you can have funds in 24 hours. If you choose to refinance for renovations (using equity), the process takes longer—typically 3 to 5 weeks—because it involves a property valuation and discharging your old mortgage.
Is interest on a renovation loan tax-deductible?
It depends on the property. If you are renovating your own home (owner-occupied), the interest is generally not tax-deductible. However, if you are renovating an investment property to generate rental income, the interest on the renovation lending facility is usually tax-deductible. Always check with your accountant.