How To Pay For Your Home Renovation

21.02.24 | Michael Brown | News

People renovate for lots of reasons. Whether you’re doing the place up to sell, or just want to expand, modernise or refresh, it’s a great way to update and add value to your home…

But renovations are time-consuming, exhausting and expensive. Mortgage Broker Sydney has helped lots of our clients renovate. Here are 3 big things we’ve learned.

Plan ahead!

Decide exactly what you want to achieve from a reno. If you have a bigger budget, it’s ok to add as you go, but it’s too easy for a laundry renovation to turn into a full-scale renovation (trust me. I’ve been there!).

What’s the end result? A flash new-looking place or just a small re-jig?

Building out the living area, landscaping, and turning two rooms into one are all more costly than a simple touch-up and some new kitchen appliances.

Get quotes

Separate ‘must haves’ and ‘like to haves’. Talk to different builders or architects. Get itemised prices for different parts of the renovation.

Most importantly, don’t over-capitalise on the renovation. This means spending more than the increase in value of your property will be once its done. Unless you really know you’re staying for life, having the best property in your neighbourhood maybe shouldn’t be your goal.

Consider your home equity

Home equity is basically any increase in your property’s value since you bought it. If you’re paying your mortgage on time, you might have equity. For most people, borrowing on the equity of their property is the easiest way to finance a renovation. 

Assuming property values generally increase (be careful!) people who have been living in a property for longer typically have more equity.

For instance, if you had a $700,000 home loan ten years ago, you might still owe $400,000 on it. But your property might now be valued at $1m. Your equity is the difference between your loan balance and the value of your home ($600,000 in this scenario). 

Lenders are careful and might not lend you the entire amount of your equity. But if you have equity, you’re in a strong borrowing position.

Ways to pay for your renovation

Refinancing your loan

Speaking of equity, refinancing means taking out a whole new loan with a new (or the same) lender. If you’re embarking on a full-scale renovation, this might be worth exploring. Depending on your circumstances, you might get a loan with a longer time to repay. A refinanced home loan will probably attract a lower interest rate than a personal loan.

More about refinancing your home loan.


Redraw is a facility that comes built in to many variable-rate mortgages. Anything extra that you’ve paid off can be accessed as cash with a redraw loan. 

Some lenders have limits on the number of times you can access your redraw money, but – if you have it – it’s probably your first option when  looking for reno funds. Of course, if you redraw, your normal loan payments will likely increase.

Personal loans

For quick, small improvements, a personal loan can be ok. But note that they attract higher interest rates that borrowing off your existing property. Proceed with caution!

Your credit card

This is really the last option. Interests is high on card debt. For a very small project, it might work out cheaper than a new loan with establishment fees, but you need to be sure you can pay the debt off fast!

Contact us today

If you’re thinking about renovating, contact Mortgage Broker Sydney straight away. 

We help you tally up your existing equity and explain what other ways to borrow will mean for you. Our service comes at no cost to you – ever.

Make that renovation a priority. Contact Mortgage Broker Sydney today.