How To Pay For Your Property Renovation

As someone who has never renovated a home, and doesn’t even own a hammer, I’m not the person to look to for advice on how to renovate a home. In fact I’m possibly the only person in Australia who doesn’t want to watch other people wielding jackhammers on The Block. However, with over 30 years’ experience in the finance sector, I am qualified to advise you on how to pay for your renovation.

It’s important we make a distinction between a renovation and an extension. A renovation can mean anything from pulling out an old bathroom and kitchen and replacing them with shiny new fittings and fixtures. An extension involves adding to or changing the actual structure of the dwelling, such as adding an extra bedroom or doing a full extension to open up the rear of your house for indoor/outdoor living.

Council Approval

If you are planning a renovation or extension, whether small or virtually a rebuild, the first item to check off your list is to find out whether you can do it at all. Check carefully with your local council on what changes they will permit to your property before you take anything further, particularly if your home is heritage listed or may have other limitations on it that could alter your plans.

Make sure you get council permission at every stage. You don’t want to fall foul of the authorities or have trouble selling your home in the future because your renovations did not receive council approval.

Calculate Your Costs With Care

Before deciding how extensive your renovation will be, it’s important to have a look into all the costs involved and get quotes from all the trades. Will you need to engage an architect or building designer to draw up plans and oversee the renovation?

There are several useful online renovation calculators you can use to help calculate costs. has a renovation calculator, which sits on the property details page of every listing for sale. Using this tool, you can calculate the estimated cost of a renovation for a home you haven’t even bought yet. To use the renovation calculator, simply scroll down to ‘Tools & Calculators’ at the bottom of any property listing on your desktop or mobile. Once you click on ‘renovation’ you can select the room type, measurements and quality of finish you require for your intended project.

Account For Unexpected Surprises

Be conservative when estimating and setting your budget. It’s a good idea to add in some extra for unexpected surprises as you don’t want to run out of money three quarters of the way through the project.

Renovation costs can quickly escalate – and you don’t want to get near the end of a kitchen renovation and find you have spent too much on the appliances, can’t afford the glass splashback your heart desired and have to compromise the overall design.

Take the time to get plenty of quotes for all work. Quotes may vary widely, so shop around to find what you are looking for – it may not always be the cheapest or most expensive that gives you the result you are looking for.

Three Options For Funding Your Renovation

Unless you win the lottery, you have three options to fund your renovation/extension:

  • Wait until you have saved the money to renovate – this is a sensible option but be wary that prices for everything from tiles to tradespeople could rise steeply while you are saving.
  • Fund the renovation from equity in your home – find out how much equity you have (i.e. the difference between the current value of your home and what the balance owing is on your home loan), and whether part of this amount could be released through refinancing.
  • Apply for a personal loan – this is another option, however the interest rate will generally be higher than on a line of credit as outlined above.

If the renovation/extension is a very substantial one you may need to obtain a fixed price contract from a builder to show how much the renovation will cost. If you are planning to undertake the work yourself or supervise it as an owner-builder you will also need to prove to the lender that you are capable of doing the work as well or better than a licensed builder.

If you’re planning on renovating ensure you determine your finances early. It’s worth determining up front if you are in a position to fund the project via refinancing your home loan.

To chat to an Online Home Loans broker, call us on 1300 135 456, web chat or fill in the Contact Us form and we’ll call you back.




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Murray Lees

Murray has an enormous amount of home loans expertise to help you find your loan – 32 years of it in fact. He started as a mortgage broker, before shaking up the market by creating Australia’s largest broker network, which today looks after over 2,500 brokers. There’s not much that Murray doesn’t know in this space!



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