February 27, 2025 by Ross Pascale
Planning a home renovation can be exciting, but it’s essential to figure out how to fund the project before you start knocking down walls or picking out new kitchen cabinets.
Whether it’s a simple refresh or a major overhaul, there are several financing options available to help you bring your renovation plans to life. Let’s explore five smart ways to fund your renovation.
1. Redraw Facility
If you’ve been paying extra on your mortgage, you may have access to a redraw facility. This feature allows you to withdraw any additional repayments you've made beyond your scheduled loan payments. The benefit? You’re essentially using your own money to fund the renovation, which can help you avoid taking out a new loan and paying extra interest. However, not all loans offer this feature, so it’s worth checking with your mortgage broker if this is an option for you.
2. Refinancing Your Mortgage
Refinancing your existing mortgage can be a practical option if you’ve built up equity in your home. By refinancing, you can secure a better interest rate or restructure your loan to free up funds for your renovation. This can be a cost-effective way to fund your project, especially if current interest rates are lower than when you first took out your mortgage. A mortgage broker like Ross Pascale can help you find the best refinancing options tailored to your situation.
3. Personal Loan
If your renovation project is more modest—like upgrading a bathroom or adding a deck—a personal loan could be a quick and flexible option. Personal loans usually come with shorter terms and fixed repayments, making it easy to budget for your renovation. Keep in mind, though, that personal loan interest rates are generally higher than mortgage rates, so this is typically best for smaller projects.
4. Offset Account
An offset account can be another handy way to fund renovations. If your mortgage includes an offset account, the money sitting in that account reduces the interest you pay on your home loan. By using funds from this account for your renovation, you can avoid taking on new debt. It’s a great way to keep your finances manageable while improving your property.
5. Government Grants or Schemes
Depending on your location and the scope of your renovation, you may qualify for government grants or incentives that could help reduce the cost of your project. Programs such as energy-efficient renovation rebates or home improvement grants can ease the financial burden. Ross Pascale can help you explore if any grants or incentives are available in your area that could benefit your renovation.
Think Long-Term
No matter which option you choose, it’s essential to ensure your renovation adds value to your property. Consider how the improvements will enhance the home’s market appeal and your own lifestyle. Strategic renovations—like updating kitchens or bathrooms—are more likely to increase your home’s value over time, making your investment worthwhile.
Ready to Get Started?
If you’re considering a renovation but aren’t sure which funding option is best for you, Ross Pascale at Mortgage Choice is here to help. Get in touch today to discuss your plans and explore the loan options that can make your dream renovation a reality.
