Home Renovation Loans for Renos, Extensions & Repairs

Ways to finance a renovation

Renovation finance is not a single product. Which structure suits you depends on the scale of the work, whether you own the property, and how much equity you have built up. There are four common routes.

• An unsecured personal loan. Suited to smaller cosmetic projects. The property is not used as security, so there is no valuation step and the paperwork is lighter, though the amount available is smaller and the term shorter.
• Refinancing to release equity. Restructuring your existing mortgage to draw on the equity you already hold. This usually gives access to larger amounts over a longer term.
• A loan increase or redraw on your current mortgage. Sometimes possible without a full refinance if your existing lender will extend the facility.
• A construction loan. For substantial structural work, where funds are released in stages against progress payments to the builder rather than as one lump sum.

Larger structural projects are often better handled through construction lending, while equity-based options sit alongside our home loan range.

Renovation refinancing: drawing on the equity in your home

If your property has grown in value or your loan balance has reduced, the difference between the two is equity, and it can often be put towards a renovation. Refinancing for this purpose means replacing or restructuring your existing loan so that part of the new facility funds the work.

Lenders assess this against the value of the property, so a valuation is normally required, and they will look at the loan amount as a proportion of that value. Whether the renovation itself is expected to add value can influence how the application is viewed. Our refinancing page covers the wider process, including what to watch for when changing lenders.

Structural or cosmetic: why lenders treat renovations differently

The distinction matters more than most people expect, because it changes which products are available to you.

Cosmetic work does not alter the footprint or structure of the building. New kitchens and bathrooms, flooring, painting, landscaping and fittings generally fall into this category, and they can often be funded without staged drawdowns. Structural work changes the building itself, through extensions, removing or adding walls, second storeys, re-roofing or re-stumping. That usually requires council approval, a licensed builder and a fixed-price contract, and lenders normally want funds released progressively as each stage is completed.

Being clear about which category your project falls into before you apply avoids starting down the wrong path.

How lenders assess a renovation loan

• Your income and how stable it is, whether you are employed, casual or self-employed.
• Existing commitments, including your current mortgage, other loans and credit card limits.
• The current value of the property and how much equity is available.
• For secured lending, the expected value of the property once the work is finished.
• The scope of works, and for structural projects the builder's contract and quotes.
• Your credit file and repayment history.

Lenders across a panel weigh these differently, which is why the same project can be assessed quite differently depending on where it is submitted.

What to have ready before you apply

• Written quotes for the work, ideally itemised by trade or stage.
• Plans and any council approvals, if the work is structural.
• Your builder's licence details and contract, where one is engaged.
• Recent evidence of income, and your most recent mortgage statements.
• A contingency allowance. Renovation costs commonly move once work begins, and lenders take a more favourable view of a budget that accounts for that.

If some of that is not available yet, it does not need to hold up a first conversation. It is usually more useful to talk through the structure before quotes are finalised, because the finance route can influence how you stage the project.

Where to go next

SB Finance is based in Sydney's Hills District and works with owners across Australia, comparing more than 40 lenders. These pages are the most useful next step: