Finance to renovate a home
Building or renovating can be a great way of creating the home of your dreams. But even if it’s just a small project, it will likely require a significant amount of money.
So you’ll need finance that can bring your grand design to life.
What are your options?
Let’s start with the different ways you can fund a reno project. Depending on whether you’re making structural or cosmetic changes to your home, you might want to:
- Borrow against the current value of your property with a home equity loan
- Refinance your existing home loan
- Take out a construction loan
- Apply for a personal loan
An expert Finance Broker can walk you through all the different scenarios. That way, you can understand the pros and cons of each option as well as the costs involved.
We apply our extensive knowledge to find a solution that is right for you and guide you throughout the loan application process.
You’ll likely need a construction loan if you’re undertaking a major renovation, even though you aren’t building a home from scratch.
Construction loans differ from standard home loans in several key ways:
- You draw down the loan at various stages of the build, rather than receive a lump sum
- Construction loans are typically interest-only loans while your home is being constructed
- Lenders usually only charge interest on the amount drawn down, not the total principal
Construction loans can be complicated as they have many moving parts. As a general rule, lenders view them as riskier than standard home loans. So interest rates tend to be higher and there are often more hoops to jump through during the application process.