Renovation Loans from 6.99% p.a.

Why a Personal Loan for Renovations?

When most homeowners think about funding renovations, they consider accessing their home loan redraw or increasing their mortgage. While these options can offer lower interest rates, they come with significant hidden costs that are often overlooked.

Adding $40,000 to a 25-year mortgage at 6.5% means you will actually pay approximately $30,000 in interest on that renovation over the life of the loan — because the debt is amortised over decades rather than years. The same $40,000 as a personal loan at 8.99% over 5 years costs just $9,530 in interest. Despite the higher rate, the shorter term means you pay significantly less in total.

A personal renovation loan also avoids the need for property valuations (which can cost $300-$600), removes the delay of accessing your home equity through a formal increase process (typically 2-4 weeks through banks), and keeps your renovation spending separate from your long-term mortgage. This clarity makes budgeting simpler and ensures the renovation debt has a definitive end date.

For renovations under $75,000 — which covers the vast majority of Australian home improvement projects — a personal loan is often the most practical and cost-effective financing option when total interest paid is considered.

Renovations That Add the Most Property Value

Not all renovations are created equal when it comes to return on investment. If increasing your property's value is a goal alongside improving your living space, focus on these high-impact areas:

Kitchen renovations ($15,000-$40,000): The kitchen is consistently rated as the most important room by Australian property buyers. A modernised kitchen with quality benchtops, updated cabinetry, and contemporary appliances typically returns 50-80% of the renovation cost at sale. Even a cosmetic refresh (painting cabinets, new handles, updated splashback) for $5,000-$8,000 can transform the look and feel of your home.

Bathroom renovations ($10,000-$25,000): Updated bathrooms are the second most valued renovation by buyers. Replacing dated tiles, upgrading fixtures, installing a modern vanity, and improving waterproofing can return 60-80% of costs. Adding a second bathroom to a home with only one can add $20,000-$50,000 to your property value for a renovation that might cost $15,000-$25,000.

Outdoor living and landscaping ($5,000-$30,000): Australians place enormous value on outdoor spaces. A well-designed deck, pergola, or alfresco dining area typically returns 60-100% of the investment. Professional landscaping including fencing, lawns, and garden beds offers one of the highest ROI percentages for a relatively modest outlay.

Painting and flooring ($3,000-$15,000): These cosmetic updates offer the best bang for your buck. A full interior repaint and modern flooring (timber or quality hybrid) can make a tired property look almost new. These renovations typically return 80-100% of costs and are within reach of most budgets.

Renovation Loan vs Home Equity: A Detailed Comparison

Choosing between a personal renovation loan and accessing your home equity involves weighing several factors beyond just the interest rate. Here is a detailed comparison to help you decide:

Speed: A personal loan can be approved in 1-3 days with funds available immediately. A home equity increase requires a formal application, property valuation, and bank processing — typically taking 2-4 weeks. If your renovation project has a tight timeline or you want to take advantage of a builder's availability, speed matters.

Total cost: Despite higher per-annum rates, a personal loan over 3-7 years often costs less in total interest than adding the same amount to a 25-30 year mortgage. Run the numbers for your specific situation using our calculator.

Flexibility: Personal loans disburse funds to your account to use as needed. You are not required to provide builder quotes, council approvals, or progress reports. This is ideal for DIY renovations, staged projects, or situations where the final scope is still evolving.

Risk: A personal loan (particularly unsecured) does not put your home at additional risk. While home equity lending is secured against your property, the risk is generally low if you maintain your repayments.

Planning Your Renovation Budget

Successful renovations start with realistic budgeting. The most common cause of renovation overspend is underestimating costs and not including a contingency buffer. We recommend adding 15-20% to your initial budget estimate for unexpected costs — discovering asbestos, hidden plumbing issues, or structural problems are common surprises in Australian homes built before 1990.

Get at least three quotes from licensed tradespeople before committing to a renovation loan amount. Check that your tradesperson holds the appropriate licence for your state (e.g., NSW Fair Trading, Victorian Building Authority) and carries adequate insurance. For renovations over $5,000 in most states, a written contract is legally required.