Are renovation loans a good idea? It’s the question on the minds of many homeowners across the country.
Whether you’re considering a complete makeover or giving your outdated bathroom some TLC, quality renovations come at a price. Depending on the amount of reconstruction you want, home renovations can cost upwards of $50,000.
In this blog, we’ll share some common strategies Australians use to renovate their homes, including a home renovation loan and the benefits of renovating your home through financing.
Three ways to borrow money for home renovations
As renovation costs continue to rise and budgets get tighter across the country, many homeowners have had to consider alternative financing options besides their savings to foot the bill. If you are thinking about borrowing money to help pay for your upcoming home renovation, here are three ways you can do it:
Use the equity in your home
Equity refers to the difference between the current value of your home and how much you still owe on it. For example, if you own a property worth $750,000 and still owe $350,000, your equity is $400,000. Equity can be treated as security with your lender, which means you can borrow against your equity to fund major projects like a home renovation.
One downside to using equity to fund your home renovation is that banks typically can only lend you up to 80% of the amount, which may not be enough to cover the cost of your renovation.
Refinance your home loan
While many borrowers seek to refinance to score a better deal on their home loan, it can also be used as a financial instrument for a home renovation. Refinancing your existing home loan for a home reno means you’re borrowing more on top of your remaining balance.
However, due to stricter lending criteria and lowered borrowing capacity, many homeowners may find this difficult to do and be turned away by a lender. This is especially true if you are a borrower with a poor credit history.
Use a home renovation loan
A home renovation loan is a type of personal loan used to fund any reconstruction or expansion you want to be done around your home. One of the major benefits of using a home renovation loan is that borrowers can potentially access greater funding opportunities and competitive rates.
Apply for a home renovation loan with Finance One
Finance One offers flexible and stress-free financing for borrowers from all financial backgrounds, including applicants with poor credit histories. We’ll work with you to provide a product that aligns with your budget and financial goals.
Apply Online NowThe four benefits of renovating your home
Aside from improved aesthetics, using a home renovation loan to renovate your home can deliver many benefits to property owners, such as:
- Cheaper than buying a new home — Renovating your home is arguably the more cost-effective option than having to move and buy a home somewhere new. It also means you can stay in the area you like and don’t have to make major lifestyle adjustments, such as your kid’s schooling or your commute to work.
- Ability to personalise — When you’re house hunting, finding your ‘dream home’ can often feel impossible, as no property will be exactly how you want it. By renovating your home, you’ll be able to have everything personalised, from the fixtures to the walls and everything in between.
- Modernise your property — If you purchased an older home with outdated features, renovations could give your home a modern and trendy touch. It also allows you to introduce smart technology and other innovative features.
- Increase the value of your home — One of the biggest advantages of renovating your home is that you can increase the value of your property and ask for a high asking price if you ever decide to sell.
Take the first step toward your dream home with Finance One
From increased property value to avoiding major lifestyle changes, renovating your home can be an excellent investment for the long term. And if you’re looking for competitive financing to kickstart your reno journey, look no further than Finance One.
Unlike our competitors, we are a lender that considers applicants with various financial histories. We believe everyone deserves to reach their property goals and shouldn’t be held back by a bad credit history.
So, is a renovation loan a good idea? If used responsibly, a renovation loan can be a fantastic way to boost your future selling potential and build your dream home. Check out our personal loan options and submit an application today.
Apply Online NowNormal lending criteria apply. Fees and charges are payable. Terms and conditions apply.
Finance One means:
Fin One Pty Ltd – ABN: 80 139 719 903
Australian Credit Licence: 387528
Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent advice regarding your legal, financial, taxation or other needs, to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information. All loan applications are subject to normal lending criteria. Fees and charges payable. Terms and conditions apply.
