A renovation boom may loom, with plenty of home owners choosing to renovate rather than relocate this year. So if you have plans for home improvements, it’s worth knowing how to fund your project.
Australians love tackling home renovations!
Home owners collectively spend over $1 billion each month improving their place.
And along with a more comfortable home, plus the potential to add value, well-planned renovations can also be a money-saver. They don’t incur big, non-value adding costs (such as stamp duty) that go hand-in-hand with selling up and buying elsewhere.
But amid the excitement of drawing up plans and comparing paint samples, it’s important to consider how you will fund your project.
Here’s what to weigh up.
For smaller renovations, it may be possible to use cash savings to cover the cost.
But if you plan to shower your place with serious love, chances are you’ll need to consider finance options.
That appears to be the case for a growing number of home owners.
The Housing Industry Association says the value of lending for home improvements is now almost three times higher than it was pre-COVID.
So it’s important that you choose the finance option that suits your needs.
Last year, around 30,000 home owners relied on housing finance to pay for renovations..
Fortunately, rising property values may mean you have enough home equity to help fund renovations.
If that’s the case, you could opt for a loan top-up. This is where your lender agrees to let you borrow extra money by increasing your current home loan.
A top-up can be a simple strategy. However, any change to your old loan should be a cue to look into refinancing.
Switching to a new home loan may allow you to secure a more competitive rate or access improved loan features.
Refinancing can come with costs. That’s why it’s so important to speak with us. We can crunch the numbers to show whether the benefits outweigh the costs, and if refinancing aligns with your goals.
For home owners undertaking major renovations, such as a large extension, a dedicated renovation or ‘construction’ loan might be a useful option.
This type of loan differs from traditional home loans.
Instead of receiving a lump sum of cash, the loan funds are gradually released in line with various stages of the project – from laying the slab to final detailing, for example.
Part of the appeal of a construction loan is that interest is typically only charged on the funds drawdown. This can be helpful for cash flow while the project is underway.
It’s usually only when the renovation reaches completion and is formally signed off that the loan reverts to principal plus interest payments.
Construction loans can be useful for renovators but they’re not available through every lender.
If you’re keen to roll up your sleeves and give your place a makeover in 2026, get in touch with us to understand which finance options could meet your needs and budget.
After all, trying to plan a renovation without a budget is guesswork. Having a clear figure to work towards can help you prioritise, and then get the ball rolling on, your 2026 home renovation project.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to your circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Paul da Silva
Director & Senior Mortgage Advisor
