How to Finance Your Home Renovation
Thinking about a bathroom refresh? A kitchen upgrade? Or maybe it’s time to finally give your outdoor space the makeover it deserves? If a home reno is on your wishlist for 2025, it’s worth knowing your financing options. Here’s a rundown of ways to fund your home improvement project.
Home renovation spending has surged over the last five years, and the trend is still going strong. According to the Housing Industry Association, rising property values have given homeowners more equity – and the confidence to invest in making their homes better.
Not only can home improvements enhance your lifestyle, but they can also add serious value to your property. So, let’s explore the financing options that could help turn your home into your dream space.
Use Your Offset Account or Redraw Facility
If you’ve been building up savings in your home loan offset account or making extra loan repayments, you might already have a source of funds ready to go.
Dipping into your offset or redraw can be an easy way to pay for renovations, but it’s important to consider how it might affect your home loan. Savings in an offset account reduce the interest you pay on your mortgage, so withdrawing money could mean paying more interest over time. Let’s crunch the numbers first to make sure this option works for you.
Top Up Your Existing Home Loan
If you’ve built up enough home equity, you might be able to top up your existing home loan to cover your reno costs.
A loan top-up can be a relatively straightforward option, especially if you’re happy with your current lender. However, some banks charge fees for increasing your loan amount, so it’s worth checking the fine print before committing.
Refinance to a New Loan
If your current mortgage no longer offers the best rate or features, refinancing could be a smart move.
Refinancing lets you tap into any extra home equity you’ve gained, potentially freeing up funds for renovations while also securing a better interest rate or more flexible loan options. It’s a win-win that could save you money in the long run.
Consider a Construction Loan
For major projects like an extension or a knock-down rebuild, a construction loan could be the way to go.
Unlike a standard home loan, a construction loan releases funds in stages as your renovation progresses. The big benefit? You only pay interest on the money that’s been drawn down, which can help manage costs while your project is underway. Plus, during the construction phase, repayments are usually interest-only, keeping your expenses lower.
Some lenders even offer pre-approval for construction loans before you’ve chosen a builder, giving you a clear idea of your budget before you start planning.
Know Your Options Before You Start
It’s tough to map out a renovation without knowing what’s financially possible.
If you’re ready to explore your financing options for a home reno, let’s chat. We’ll help you find the right loan solution so you can move forward with confidence and get your project off the ground.
Disclaimer: This article provides general information and should not be considered financial or tax advice. It does not take into account your personal circumstances. Always seek professional advice before making financial decisions. This content is protected by copyright laws and cannot be modified, reproduced, or republished without prior written consent.
