Renovating in 2021? A personal loan could be what you need

By Polly Fleeting ·

Ready to leave 2020 in the past and have a full on 2021 refresh? Join the crowd!  

While we can’t help you with things like getting fit, finding love or kicking lingering lockdown habits, maybe home renovations is on your list of next year’s to-dos.

Depending on whether you are planning a whole house makeover or simply sprucing up the kitchen, the cost of your renovation is essentially up to you and your budget. 

If you’ve collected all your 2020 savings and you have enough to cover your planned reno, well done! But if not, you might want to consider your lending options to cover some of the costs: one being a personal loan

“It’s no secret that renovations can be expensive, so Aussies looking to give their home a facelift need to get savvy when it comes to covering what can be a hefty price tag,” Mozo Director, Kirsty Lamont says. 

“With some personal loan rates sitting below 4%, now could be the time to take advantage of low rate lending. But, it’s important to stick to a budget when borrowing for renovations and to make changes that will increase the overall value of the property when it comes time to sell.” 

Why use a personal loan for a home renovation 

A personal loan is a great way to help cover a renovation, and spread the cost over anywhere from one to ten years. 

There are two choices when it comes to deciding on a renovation loan: secured vs. unsecured and fixed vs. variable

Currently on the Mozo database, the average secured personal loan rate sits at 7.96% while the unsecured rate is a higher 10.26%. A secured loan requires you to put up an asset against the loan (like a car or your home) in return for a lower interest rate. Alternatively, if you opt for an unsecured option you may receive a higher rate but don’t have to risk any of your belongings as security. 

And what about fixed vs variable? Well, the choice is yours.  

Fixed rates
offer more certainty around how much your regular repayment will be as you lock in your rate for the entire loan. The downfall is that sometimes these loans come with hefty exit fees if you pay down your loan early. A variable rate loan however generally comes with more flexible repayment options and no early exit penalty. There is an element of risk though, as your rate can change with the market - meaning it can do down but also can be hiked up at any time. 

Want to start comparing loans for your reno? Check out some options on offer right now.

Compare personal loans - last updated November 28, 2020

Search promoted personal loans below or do a full Mozo database search. Advertiser disclosure.

I want to borrow


  • Hot DealNo Fee Personal Loan for loans up to $40,000!


    6.95% 17.95% p.a.

    6.95% 17.95% p.a.based on $30,000
    over 5 years

    Terms from 2 to 7 years. Representative example: a 5 year $30,000 loan at 6.95% would cost $35,599.71 including fees.

  • mozo-experts-choice-2021

    6.75% 8.48% p.a.

    6.96% 8.69% p.a.based on $30,000
    over 5 years

    Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 6.75% would cost $35,580.23 including fees.

  • 5.75% 21.99% p.a.

    6.47% 25.11% p.a.based on $30,000
    over 5 years

    Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 5.75% would cost $35,190.18 including fees.

  • Hot DealBLACK FRIDAY SALE: No establishment fee and first repayment up to $500 on Alex if you apply by 1 December 2020^#


    6.95% 19.99% p.a.

    6.95% 19.99% p.a.based on $30,000
    over 5 years

    Terms from 1 to 5 years. Representative example: a 5 year $30,000 loan at 6.95% would cost $35,599.71 including fees.

  • 6.99% 9.49% p.a.

    6.99% 12.2% p.a.based on $10,000
    over 3 years

    Terms from 2 to 3 years. Representative example: a 3 year $10,000 loan at 6.99% would cost $11,114.11 including fees.

  • 7.95% 19.45% p.a.

    8.22% 19.76% p.a.based on $30,000
    over 5 years

    Terms from 3 to 5 years. Representative example: a 5 year $30,000 loan at 7.95% would cost $36,649.45 including fees.


Tips to setting your renovation budget

When renovating your home, it’s important to avoid going overboard and keep things within a realistic budget. While a swimming pool and tennis court might seem like a good idea at the time, you don’t want them to leave you swimming in deep debt for years on end. 

Here are some tips to keep in mind as you renovate in 2021:  

  • Renovate for profit: The primary thing to remember is that when you renovate your house you want it to increase in value for when you eventually sell it. Whether it’s removing walls to create a more ‘open-living’ space or adding a granny flat, think about what potential buyers might want from the property you have. 
  • Keep within your budget and set a repayment plan: Have a clear idea of how much you want to spend and stick to it. Similarly, make sure you have money ready to go to start making repayments on your renovation loan, you don’t want to be slapped with late fees or default on your loan and potentially lose assets over it.  
  • Choose a flexible loan option: Being able to contribute a lump sum to your loan is handy in the case you come into more money, such as a bonus at work. Make sure the loan option you are considering has features like free extra repayments, so you can put additional funds towards your debt whenever you want.  
  • Don’t fall into the DIY trap: If you aren’t a tradesperson, a DIY home reno is pretty risky. While the cost straight off the bat may be significantly less, the cost of repairs to any mistakes you make could outweigh the amount you’d pay for a professional.  

Want more on all things personal loans? Head over to our personal loans comparison page for more!

^See information about the Mozo Experts Choice Personal Loans Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

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.

Polly Fleeting
Money writer

Polly Fleeting is a personal finance writer here at Mozo, specialising in loans and credit cards. Her work is aimed at helping people find ways to make smart product choices, reduce debt and get more for their hard-earned dollars. Polly has a degree in Journalism from the University of Technology, Sydney.