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How To Finance A Renovation

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How To Finance A Renovation

Home renovations are costly, time consuming, and often full of unforeseen hiccoughs and issues. The process of renovation itself is one that ensures ups and downs along the way, and each house comes with its own set of unique challenges.


While these things are often far beyond your control, there are some aspects of renovating that you are able to exert your own agency over.

Well-planned financing is paramount to a stress-free renovation. Knowing where your money’s going, how much you’re able to spend, and where best to allocate said spending are all absolutely crucial factors.


The path of financing your home transformation comes entirely down to personal circumstances. Let’s take a quick look at some of the most popular ways.

1. Using the equity in your home

This is a very common way to finance your renovation.

Equity boils down to the difference between the amount you owe on the mortgage, and the bank’s valuation of the home. Usually the equity rises over time in tandem with the value of your property, and the more your mortgage is paid off.

It’s important to note: the amount you’re loaned will not be the exact value of your equity, rather, it’ll be an amount decided by your bank based on the amount of equity you currently have.

This will add to your mortgage, of course, but it’ll be worth it when your dreams for your home are actualised.


2. Refinance your existing loan

Be it switching lenders or changing up the preexisting terms of your current loan to access more money, a refinance may prove an excellent way of financing your renovation, and giving you a little opportunity to find or create the best loan for you.

3. Consider smaller loans

A personal loan does tend to come with a higher interest rate, but often the smaller changes are the ones that prove most valuable in the years to come. A smaller loan will take less time to pay back, but will still enable you to begin your renovations now, instead of waiting around for approval for a larger loan.

4. Use your redraw facility

Home loans vary greatly from each other, all coming with an array of different features, extras and bonuses to make them more appealing to the buyer. A redraw facility is one of those extras - the ability to make extra payments on your mortgage, but access those payments if need be. If investing in your home anyway, it may be worthwhile considering redrawing.

All in all, there’s no one way to go about financing your renovation. As long as you have full knowledge of what you’re agreeing to and what terms and conditions already are in place, you should be more than equipped to navigate the sometimes daunting world of financing.

Don’t be afraid to ask as many questions of the lender as you like!

Knowing what’s right for you is key - and knowing what you’re buying into is integral for that.