Financing your next Renovation

March 27, 2017
Kathryn Coleman


When planning a renovation, big or small it is important to consider how you intend to pay for it.


There are many different options available to you - savings, home loan top up, refinancing, or personal loan.  The key is finding the right solution for your needs and situation.


Depending on how long you have owned your property or being paying off your home loan you may have built up a certain amount of equity in your home.  Increase in property values in your area can also contribute to accessible equity.  Equity is the difference between what the property is worth and how much is still owing on the mortgage.  For example your home is worth $300,000 and you have $100,000 left to pay on your mortgage. This would leave you with $200,000 in equity.  It must be noted that different lenders will allow you to access different levels of equity, known as LVR (Loan to Valuation Ratio).  Your mortgage broker will help with these calculations

Affordability also needs to be demonstrated.  If your home loan goes up, can you afford the bigger repayments 


Another way you could fund your renovations is through refinancing. By approaching a different lender, you may be able to borrow more money to help fund your renovation plans. And, with interest rates currently sitting at all-time lows you may even secure a home loan rate that saves you money in the long run.


If you have major structural plans in place you will fund your renovations via a construction or building loan. A construction loan is where the lender releases the funds in stages to the builder as the work is completed 


Personal Loan can be a good option if the renovations you have in mind are reasonably minor and you plan to pay off this portion over a shorter period than a home loan. Keep in mind though that the interest rates on personal loans are higher (as a general rule of thumb) than the interest rates that are charged on home loans.


There are many important factors to consider before deciding on how you intend to fund your upcoming renovation plans. Your mortgage broker, George Cremona, we will be able to talk you through your options and help you to decide on a plan of attack that is best suited to your individual situation.


 Tags: RenovationsRefinanceBudgeting

Posted in: Renovating

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