More Aussies renovating homes: 3 expert ways to get value for your money

couple planning home renovation using personal loan

Whether you’re dreaming of an entirely new kitchen or are looking to retile your bathroom to give it a facelift, home renovations can be really exciting. 

And more Aussies are jumping on board. 

In fact, according to recent numbers from the Australian Bureau of Statistics (ABS), over the March quarter of 2021 a total of $2,857.7 million worth of home alterations and additions were made. That’s 11.4% more than in over the 2020 December quarter and 18.5% more than the 2020 March quarter. 

Plus, the ABS also found that in July 2021, $995.7 million worth of residential alterations and additions were approved, a growth of 0.1% on the previous month. 

The truth is though, home improvements can be pretty costly. So when renovating, it’s all about being savvy. You want a home you can enjoy but one that will also see some returns when it’s time to sell.  

What renovations are worth doing? 

When deciding how to renovate your home, one key thing to continually ask yourself is: what adds value to my property? 

That’s not to say you should sacrifice on making changes that you love. Instead, just keep your home buyers hat on while you let your creative juices flow. 

But which rooms should I focus on? 

Well, according to home loan lender Yard’s chief executive officer, Toni Mladenova, it depends on whether you intend to renovate to sell or renovate an investment property for renters. 

“Customers who are renovating to sell a property focus on key rooms like the kitchen and bathroom, which buyers tend to prioritise,” she says. 

“Customers who renovate an investment property for rental income focus on practical, cosmetic projects rather than expensive structural renovations, as these customers are less likely to get a return on these - especially in the short to medium term.” 

In saying that, Yard found that the top two reasons that Aussies look to renovate is to stay in their current area or because it’s cheaper than moving. 

“Kitchens are the most popular room to renovate, followed by living rooms, bedrooms, bathrooms and the laundry,” Mladenova said. 

Similarly, renovation personal loan lender Handypay’s founder and chief executive officer, Adam Sutherland says when it comes to making money out of a home reno it’s all about knowing your target audience. 

“Regarding return on investment, it can really vary based on the home and the location. We would encourage renovators looking to get their biggest bang for their buck to understand their target market before undertaking major renovations,” he says.

“That being said, a well-executed kitchen and bathroom renovation seem to still add great value to a home, as well as flooring and painting. For the right target market a pool can result in an excellent return on investment.

“Transforming your home into more sustainable living can reap significant returns from the right buyer. This can include obvious improvements, such as solar and batteries, but can extend to double-glazed windows, insulation, energy efficient air-conditioning and more.”

Should I consider a green home renovation? 

With sustainability being top of mind for many people these days and the reality of  reduced living costs in an eco-friendly home, it may be worth considering going green. 

“If you’re building a new home then it can pay big dividends to think sustainable when working through the initial design and materials,” Sutherland says. 

“The savings associated with energy and water usage will appeal to a wider market and the savings on the cost of living in the home will attract a premium on the day you wish to sell.” 

And if you are looking to take out a renovation loan to cover a green home improvement, you’ll be pleased to know that currently on the Mozo database, the average unsecured green personal loan rate sits at 6.85% p.a., while the average unsecured personal loan is a higher 9.78% p.a. 

So, what are my renovation finance options?  

There are a bunch of ways you can cover the cost of renovations, from paying out of pocket to borrowing money. 

If you have the funds in your savings account to pay for the home touch ups you need, well done! All you need to do now is formulate your budget … and stick to it. 

On the other hand however, if this isn’t you, don’t fret because you might not be out of options. In fact, there could be a few for you to choose from, whether it’s dipping into your home loan or taking out a personal loan. Just ensure to crunch the numbers to see if either option is appropriate for you and your finances. 

When it comes to your home loan, one option could be to take advantage of a redraw facility which allows you to dip into any extra repayments you have made over the life of the loan. Not all lenders offer this feature and sometimes it comes at a cost, but it’s worth checking to see if your current loan has this feature. 

Keep in mind, redrawing on your extra repayments will delay you paying down your home loan early and increase the amount of interest you pay as opposed to if you had left the additional contributions untouched. 

Alternatively, you could use the equity you have in your home loan as “cash out” to cover the cost of a renovation, a feature that Yard offers to its customers. 

“The cash out feature is available to all Yard customers that have accessible equity in their home. The customer can request the cash out at the point of initial application or can do a loan increase after settlement,” Mladenova said. 

“As an example, say your property is worth $500,000 and your remaining home loan is $350,000. Your lender will take your property’s value ($500,000), work out 80% of this value ($400,000) and subtract the remaining balance of your home loan ($350,000). This calculation will offer a usable equity amount of $50,000.”

It’s important to note though that this is essentially increasing the amount that you borrow on your home loan, meaning you’ll end up paying more in interest overall.

Want to check out some home loans with these types of features for a future reno? Take a look below!

Top home Loans with redraw facility

Yard Variable Home Loan Special
  • Variable rates from 1.99% p.a. (2.02% p.a. comparison rate*)
  • Redraw facility and cash out feature
  • 2021 Mozo Experts Choice Award winner^^
Find out more

Looking for an award-winning low rate home loan that allows you to redraw funds to finance a reno down the track? Yard’s Variable Home Loan Special could be the right product for you. For customers that apply by 31 October 2021, variable rates start at a competitive 1.99% p.a. (2.02% p.a. comparison rate*) for customers with an LVR less than 70% or 2.09% p.a. (2.12% p.a. comparison rate*) for LVRs between 70% and 80%. Plus, on top of regular repayments borrowers can make additional contributions as well as access a redraw facility or cash out feature, which can be used for something like a home renovation. This loan also has the option of an offset account for an additional $10 monthly fee. Yard took home two 2021 Mozo Experts Choices Awards for Best Low Cost Home Loan and Best Offset Home Loan. Smart Booster Home Loan
  • Special variable rates from 1.85% p.a. (2.21% p.a. comparison rate*)
  • Redraw facility
  • 2021 Mozo Experts Choice Award winner^^
Find out more

Online lender has a hot home loan offer with two competitive rates up for grabs. For customers that opt into the one-year special rate, for the first 12 months the rate sits at a low 1.99% p.a. (2.47% p.a. comparison rate*) for customers with an LVR 80% or below, which then reverts to 2.48% p.a. Meanwhile, for the two-year offers for borrowers with an LVR lower than 80%,  the rate sits at 1.85% p.a. (2.21% p.a. comparison rate*) for 24 months, which then reverts to 2.25% p.a. On top of killer rates, this lender also gives borrowers the ability to redraw on their extra repayments if they need to cover the cost of a home reno. Plus, for an additional 0.10% on your variable rate, there is the option to add an offset account. It’s no wonder that this loan received two 2021 Mozo Experts Choice Awards for Best Offset Home Loan and Best Low Cost Home Loan.

Athena AcceleRATES Variable Home Loan
  • Variable rates from 1.99% p.a. (1.99% p.a. comparison rate*)
  • Redraw facility
  • 2021 Mozo Experts Choice Award winner^^
Find out more

If an award-winning home loan with competitive rates and a redraw facility is what ticks your boxes, Athena’s AcceleRATES Variable Home Loan could be worth checking out. For borrowers with a LVR lower than 60%, Athena offers variable rates that start at a low 1.99% p.a. (1.99% p.a. comparison rate*). While for customers with an LVR of 60%-70%, the rate is 2.09% p.a. (2.02% p.a. comparison rate*) and 70%-80% its 2.19% p.a. (2.08% p.a. comparison rate*). And the good news is, as you pay down your loan, Athena discounts your rate as you enter a lower LVR tier (as above). With this product, there is the opportunity for borrowers to make free extra repayments and redraws whenever they need to. Just remember though, Athena doesn’t allow customers to set up an offset account with this loan.

A personal loan is also a good option as a way to fund a renovation project. 

According to Handypay, the average renovation loan amount is around $30,000 and customers often use it for things like pools, kitchen and bathrooms, solar and batteries, pergolas, decking, roofing and blinds. 

However, personal loans can also be used for other home improvements too and for higher amounts. On one hand you could choose a secured loan where you put an asset against the loan in return for a lower rate. Or if you opt for an unsecured loan option, you won’t need to put up any assets as collateral but may receive a higher rate. 

For some top personal options for your renovation, scroll on …

Top personal loans for renovations

NOW Finance No Fee Unsecured Personal Loan
  • Fixed rates from 5.95% p.a. (5.95% p.a. comparison rate*)
  • No upfront, ongoing or early repayment fees
  • 2021 Mozo Experts Choice Award winner^

If you’re renovating your home a top unsecured personal loan could be what you need, and that’s what’s on offer from 2021 Mozo Experts Choice Award-winning lender NOW Finance. Depending on a customer’s credit rating, fixed rates start at a low 5.95% p.a. (5.95% p.a. comparison*) and there are no upfront, ongoing or early repayment fees either. Loan amounts range between $5,000 and $50,000 and can be paid back over a 2 to 7 year period. Plus, there is also the option to make free extra repayments on top of either weekly or fortnightly regular repayments, which means you could end up paying off the debt even sooner. Just remember, you cannot make redraws on your additional contributions with this loan.

OurMoneyMarket Low Rate Personal Loan
  • Fixed rates from 5.45% p.a. (6.07% p.a. comparison rate*)
  • Extra repayments and redraws allowed
  • 2021 Mozo Experts Choice Award winner^

The OurMoneyMarket Low Rate Personal Loan may be the perfect option to fund your home reno. Not only does this unsecured loan come with a tonne of handy features like a weekly, fortnightly or monthly repayment schedule, free extra repayments and redraws, there’s low rates for grabs! With this loan rates start at a competitive 5.45% p.a. (6.07% p.a. comparison rate*) based on an applicant's credit rating. Customers can borrow anywhere from $2,001 to $75,000 with this product and loan terms range between 1 and 7 years. Just keep in mind you’ll need to fork out a $250 application fee, but after that there are no ongoing or early repayment costs to worry about.

Handypay Personal Loan
  • Fixed rates from 5.75% p.a. (5.96% p.a. comparison rate*)
  • Flexible repayment options
  • No ongoing or early repayment fees
Find out more

Need a personal loan to cover the cost of an upcoming home reno? Handypay could be the lender for you! Handypay offers unsecured personal loans that are specifically designed for small or large home renovations with fixed rates starting at 5.75% p.a. (5.96% p.a. comparison rate*) depending on your credit rating. Loan amounts range from $2,000 and $75,000, loan terms are between 1 to 7 years and there are also flexible repayment features, like the option to make weekly, fortnightly or monthly regular repayments and the ability to make free extra repayments (no redraws allowed). While there are no ongoing or early repayment costs attached to this product, Handypay does charge an upfront $250 application fee.

Other ways to pay for a home renovation: 

  • Going eco-friendly? Opt for a green loan: Whether it’s installing solar panels, buying a rainwater tank or anything energy-efficient, you may benefit from taking out a green personal loan instead. As mentioned above, the current average green loan rate is lower than that of an unsecured multi-purpose personal loan. Right now on the Mozo database there are 11 unsecured green loans on offer. 
  • Use your plastic, but within reason: While it’s unlikely your credit card balance will cover the cost of a full house reno, a credit card might not be a bad option if you are just giving your home some small touch-ups. Just ensure you have a solid plan to pay it back to avoid hefty interest repayments. Keep in mind though, it can be easy to overspend with a credit card, so only use this option if you are sure you can do so responsibly. 
  • Wait it out and save, save, save: If the idea of borrowing money to cover the cost of a reno makes you feel uneasy, you may want to ask yourself “what’s the rush?” In the case that you have the opportunity to wait it out and save some more, it may not only set your mind at ease but also help you financially in the long run. In this case, you may want to review your current savings account and opt for a high interest option. 

Want to check out some more renovation loans? Jump over to our renovation loan hub or read our handy renovation loan guide for some more info!

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

*** WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

^See information about the Mozo Experts Choice Personal Loan Awards

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While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

^^See information about Mozo Experts Choice Home Loans Awards