Renovation Loans: Fund Your Dream Home Upgrade!

Thinking of giving your home a fresh new look or adding that dream outdoor entertaining space?

If so, you’re not the only one, because renovations are incredibly popular, with homeowners investing $2.84 billion on alterations and additions in the June 2024 quarter, according to the Australian Bureau of Statistics. Typical costs range from about $2,000 to $5,000 for bedrooms, $15,000 to $30,000 for bathrooms and $25,000 to $50,000 for kitchens, according to JDL Constructions.

There are several ways that we at SP Financial Solutions approach this for our clients:

• Assess Your Equity: Start by finding out your property’s current value and calculate how much equity is available – We can arrange a FREE property valuation to find this out for you bearing in mind a lenders valuation may be different to a real estate agents valuation!
• Consider your existing lending: You may be able to simply top up your current mortgage and this is a PERFECT time to look at your lending – is your rate still competitive? Is your mortgage structured properly? Do you have all the features that you need? How much equity can you access?
• Different lenders approach lending differently! This sounds self-evident but some lenders will lend you money to do simple renovations that are non-structural – some lenders will want to control all the funds as a construction loan – not all lenders are the same and this is why you need an experienced broker – at SP Financial Solutions this is what we do!
• Construction loan: With a construction loan, the funds will be distributed in stages throughout the project, rather than in an upfront lump sum, and you’ll be charged interest only on the funds you’ve already received. Your construction loan may be interest-only during the building phase and will then revert to a standard principal-and-interest home loan once the building has been completed.
• Cash out: You control the funds and decide when and where they are used.

If you’re thinking about paying for the renovations with a credit card, please be careful, because while you will not have to go through an application process, the interest rate will be extremely high and could leave you susceptible to falling into a debt trap.

How Does It Work?

1. Plan
2. Budget
3. Fund
4. Start your renovations!

Why Consider a Renovation?

• Increase Property Value: Strategic renovations can significantly boost your home’s market value.
• Tailored to Your Needs: You can design improvements that suit your lifestyle or rental property objectives.
• Cost-Effective Funding: Renovation loans often come with lower interest rates compared to personal loans or credit cards.

Things to Keep in Mind

• Factor in additional costs like council approvals, unexpected construction expenses, and potential market fluctuations.
• Speak with us at SP Financial solutions to ensure the loan structure suits your financial situation.

By using your equity wisely, a renovation loan can help you transform your home into a space that meets your needs while building long-term value.