Five ways to fund your finances – as you transform your home !

Five ways to fund your finances – as you transform your home !

Okay, yes, a renovation can be a potentially big strain on your collective time and money.

But at OzBroker, we can provide the expert financial advice that’ll help minimise your stress.

Here are five options that will make life easier when it comes to the ultimate home makeover.


1. Home equity loan

This is one of the most common ways to borrow money in order to renovate.

Basically, it involves borrowing against the current value of your home, before any value-adding renovations.

Yes, you won’t be able to borrow the full value of your home – but, without mortgage insurance, you can typically borrow up to 80 percent of the value if you own it outright.

There’s one potential problem with this option: renovation costs may actually be higher than the equity you have available. 


2. Construction loan

This works in a similar way to a home equity loan, except the lender will factor in the value of your home once renovation is completed.

And rather than getting everything upright, you’ll have access to this loan in staggered amounts over time.


3. Line of credit

This is particularly suited to renovations that might be relatively protracted or ongoing.

On application, you establish a revolving credit line that can be accessed whenever you want (up to your approved limit, obviously).

You only pay interest on the funds you use and, as you pay off your balance, you can re-borrow the unused funds without reapplying.

However, one thing to note: you have to be careful to keep track of serviceability. It’s important so you can make repayments on the line of credit that will reduce the principle.


4. Personal loan or credit card

These are potentially suitable if your renovations are relatively minor. Personal loans are usually capped at around $30,000 – but interest rates are higher than on home equity loans.

The use of credit cards is only really advisable in the instance of very small renovations. Interest rates are usually much higher than on mortgages. Still, in the case of a very small project, that extra interest might actually amount to less than loan establishment fees. Also, applying for a personal loan or credit card can be much quicker than applying for a construction loan from bank.


5. Pay your own way

Using your own money to finance your reno can potentially be the simplest – and least risky – choice moving forward. 

This may mean using your savings, hold investments, redraw facility or the funds accrued in your home loan’s offset.

Hey, being able to focus on (the sometimes stressful) process of managing a renovation without worrying about repaying any loans might be the best option!


… One more thing:

It may seem really obvious – but you should always be mindful about exactly how a renovation will add value to your property.

Ideally, you want to make positive impacts on your home that will appeal to a majority of potential buyers.


Contact us for advice

We know when it comes to making choices about big investments, things can sometimes feel overwhelming. Please feel free to hit us up for a FREE consultation – we’re here to provide the clarity and expertise that’ll make the right choice easy.



Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top