How to finance a renovation

The question of how to finance a renovation is top of the list when it comes to planning and preparing for work to be done to your home. There are a number of options to consider when it comes to financing a renovation.

1. Cash

Using your own cash is one of the cheapest ways to finance a renovation – as long as that cash is not earmarked for other spending, or will be needed should an emergency arise. Many people do not have cash available to finance a renovation so if you’re in that boat, read below to see what your other options could be.

2. Redraw from your current home loan

If you are ahead in your mortgage repayments you might be able to redraw that money and use it to pay for renovations. You will need to find out if your home loan has a redraw facility available and whether there are any fees associated with making a redraw.

3. Refinance your existing home loan

By refinancing your existing loan you could apply for extra funds to cover the renovation. You may need to have renovation plans ready to show your lender should they need to take into account the finished product when putting a value on the property.

Refinancing your home loan could come with other benefits too, such as potentially getting a better deal when it comes to rates and any other extra features your current loan may not currently give you. 

4. Apply for a personal loan

If you want the money quickly but need time to repay it then a personal loan might be the best option for you. You can apply for a personal loan once you know how much money you will need to borrow. Do up a budget as part of your renovation plan. It’s also important to check what kind of renovations your personal loan covers. For example, some personal loans cannot be used to finance major restructuring projects.

5. Apply for a credit card

If you’re planning on doing smaller renovation jobs yourself then a credit card might be a good way to finance the materials and tools needed. If you are doing small ongoing jobs you could use a credit card and pay the balance off each month – potentially saving you on interest repayments.

6. Equity in your home

Equity is the difference between what your home is worth and how much you owe on it. Remember, your home could be worth more now than when you bought it. To find out what your home is worth you can have an appraisal done to find out its current value.

You can apply for a line of credit to finance renovations using the equity in your home. You will need a valuation done on your property to take out a line of credit. A line of credit can be a complex product, so it’s best to talk to a lending specialist if you’re interested in finding out more. 


* Based on a $150,000 loan over 25 years. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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