Get the Finder app 🥳

Track your credit score

Free

Options for financing a home renovation

Planning a home reno? There are several types of mortgage and personal loans you can use to fund the costs.

Updated

Fact checked

We’re committed to our readers and editorial independence. We don’t compare all products in the market and may receive compensation when we refer you to our partners, but this does not influence our opinions or reviews. Learn more about Finder .

Renovations can make a good home great and add serious value to your property. If you're planning to renovate your home there are several mortgage products you can use to cover the costs. You can take out a separate mortgage, unlock equity from your home or top up your home loan.

It's worth comparing these options and finding the one that works best for you.

Line of credit home loan

A line of credit loan uses the equity in your home to extend you a credit limit that can be used for any purpose. Equity is the difference between what you owe on your home and its current value. For instance, if you owe $500,000 on your home loan and your home is valued at $750,000, you've built up $250,000 in equity.

A line of credit loan allows you to tap into this equity. Your lender will offer you a credit limit based on your equity, and you can use as much or as little as you like.

  • Benefits

A line of credit loan can be great to use for renovations because it offers you flexibility. You can use as much or as little of your credit limit as you need. You'll only be charged interest on the amount you've actually used for your renovation project.

  • Drawbacks

One of the main drawbacks of a line of credit loan is that these products usually come with a higher interest rate than standard home loans. It can also be difficult to manage a line of credit home loan. You'll have to budget well to make sure you keep your project within your credit limit, and to only use the amount of credit you intend.

Data indicated here is updated regularly
$
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
P&N Bank Equity Access Home Loan
4.87%
$395
$10 monthly ($120 p.a.)
90%
A home loan which gives flexible access to your equity.
Aussie Select Line of Credit - (LVR 70.01% to 80%) (Owner Occupier)
3.59%
$0
$15 monthly ($180 p.a.)
80%
A low rate line of credit with low ongoing fee.
loading

Compare up to 4 providers

Construction loan

A construction loan is a specialty mortgage that pays a builder throughout the construction process. These loans are structured differently than traditional mortgages. Rather than paying out a sum of money all at once, these loans pay in instalments known as progress draws.

  • Benefits

Construction loans can be a good option if you're undertaking substantial renovations that require a significant amount of structural work. You can borrow for a construction loan based upon the final post-renovation value of your home.

Construction loans also give you the option to pay only the interest portion of your loan until after construction is complete.

  • Drawbacks

Getting approved for a construction loan can be a bit more complicated than a traditional home loan. You'll need a builder to draw up plans to provide to your lender. If your renovation project is smaller, a construction loan probably isn't the right choice.

Data indicated here is updated regularly
$
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
Greater Bank Great Rate Home Loan - Construction Loan (Owner Occupier, P&I)
3.66%
3.67%
$0
$0 p.a.
90%
Fund the construction of your new family home with a very competitive variable interest rate. Available with a 10% deposit.
Heritage Bank Discount Variable Home Loan - LVR ≤ 80% (Owner Occupier, P&I) New Customers Only
2.78%
2.83%
$600
$0 p.a.
80%
Family guarantee option available. Enjoy flexible repayments and a low minimum loan amount.
ANZ Land Loan - Owner Occupier (P&I)
4.39%
4.49%
$600
$5 monthly ($60 p.a.)
90%
Buy vacant land with a competitive interest rate. 5% deposit option available.
Heritage Bank Fixed Rate Home Loan - 2 Year Fixed Rate (Owner Occupier, P&I) New Customers Only
2.59%
4.30%
$600
$8 monthly ($96 p.a.)
95%
Get a partial offset account and the option to make interest-only repayments.
Endeavour Mutual Bank Special Fixed Home Loan - 3 Year (Owner Occupier, P&I)
2.28%
2.86%
$250
$0 p.a.
95%
A competitive 3 year fixed rate loan for home buyers. Available with a 5% deposit.
loading

Compare up to 4 providers

Home loan top-up

A home loan top-up is another way to tap into the equity in your home. When you refinance your home loan you can draw out cash from the equity you've built up. Your lender will re-value your home as part of the refinancing process, and may offer you a larger home loan amount based on the new value.

You can draw out cash from your loan. The maximum amount you can withdraw is the difference between the new home loan amount and the amount you owe.

  • Benefits

A home loan top-up is a fairly simple process, and could be an easy way to finance your renovation. You won't have to apply for an entirely new loan, and will only have a single home loan and repayment to worry about. If you've built up a lot of equity, you could be able to draw out a significant cash amount.

  • Drawbacks

If you top up your home loan, you'll be adding to your original debt. This means it could take you longer to pay off your home loan and that you'll pay more interest in the long run. Also, your repayments will rise. You'll need to budget to make sure you can afford your new repayment amount.

Data indicated here is updated regularly
$
% p.a.
Offset account
Split account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Maximum Insured LVR Amount Saved Short Description
St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)
2.54%
2.56%
$0
$0 p.a.
80%
Up to $4,000 refinance cashback. A competitive variable rate loan from St.George. Refinancers borrowing $250,000 or more can get $4,000 cashback (Other terms, conditions and exclusions apply).
UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupiers, Variable P&I Rate
2.49%
2.49%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)
2.29%
2.72%
$0
$8 monthly ($96 p.a.)
95%
Up to $3,000 refinance cashback.
A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
homeloans.com.au Low Rate Home Loan with Offset - LVR Under 60% (Owner Occupier, P&I)
2.29%
2.31%
$0
$0 p.a.
60%
A competitive rate with no application or ongoing fee. This loan is not available for construction.
Athena Celebrate Home Loan - 60% LVR  Owner Occupier, P&I
2.34%
2.34%
$0
$0 p.a.
60%
Owner occupiers with 40% deposits or equity can get this competitive variable rate loan. No upfront or ongoing fees.
loading

Compare up to 4 providers

Personal loans for renovations

If none of the above options work for you then maybe a personal loan is the way to go. A personal loan can be either secured or unsecured. This means it can either be secured by an asset, such as a vehicle, which the lender can take possession of in the event of default, or it can be tied to no assets at all.

Personal loans can be a good option if your renovation is small and won't require a significant expenditure.

  • Benefits

Personal loans are often processed quickly, so you could have the funds in your account shortly after applying. If you're borrowing a small amount, they can be a fast, convenient way to fund your renovation.

  • Drawbacks

Personal loans often carry very high interest rates. While secured loans have much lower rates than unsecured loans, they typically have higher rates than mortgage products. Rates can vary significantly from one lender to the next, so it's crucial to compare your options.

Learn more about personal loans for home renovations

Image: Shutterstock

More guides on Finder

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Go to site