Renovation resolution? Here’s why a personal loan might be a good idea

Kelly Emmerton   |   11 Jan 2018

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With 2018 here and new year’s resolutions made around the country, many Aussies probably have plans to finally embark on a long-overdue home renovation project. But before getting started, would-be renovators should check their rainy day fund and consider applying for a personal loan to cover costs, said Mozo property expert, Steve Jovcevski.

According to Jovcevski, having the budget planned out before starting a renovation can mean the difference between a good quality upgrade which adds value to a home, and a half-finished job.

“It’s always a good idea to plan your budget thoroughly before you start any major renovation, because if you run out of funds halfway through the job, it can be tricky to convince a bank to lend you more money,” Jovcevski said.

“If you’ve run over budget, that might be a sign that the work is getting more expensive than you were prepared for, which can make a lender nervous about your ability to repay a loan.”

To avoid being stuck with a half-gutted bathroom or carpet halfway torn up, Jovcevski urged borrowers to seek out quotes for renovation work and itemise a budget before getting started.

“Whether you’re doing the work yourself or getting a tradie in to do it, plan for each cost involved, and then plan for unexpected expenses that crop up - because they usually will.”

While some Aussies rely on their savings to fund a home renovation, another option is to take out a personal loan, some of which are specifically geared toward paying for home upgrades. According to Jovcevski, taking out a loan could be a smarter option for renovators who aren’t sure their savings will cover the work that needs to be done.

“If you have the savings to cover the work, then that’s great. But not everyone has a spare $20,000 to spend on a new bathroom,” said Jovcevski.

“Plus, it’s important not to stretch your budget too thin, because you’ll wind up cutting corners, and ultimately, you won’t be happy with the result and the reno won’t add value to your home like you want it to. In that case, it could be well worth borrowing the money and paying a bit of interest to make sure the job is done right.”

If a fresh new kitchen or brand new deck is on your to-do list for 2018, check out some of the personal loans below to get started.

Personal loan comparisons on Mozo - rates updated daily

  • Promoted

    Harmoney

    Harmoney

    Unsecured Personal Loan (Fixed)

    6.99% p.a.to 26.95% p.a.

    7.69% p.a.to 28.21% p.a.based on $30,000
    over 5 years

    $500.00upfront and $0.00/month

  • Promoted

    HSBC

    HSBC

    Unsecured Personal Loan (Fixed)

    9.50% p.a.to 15.99% p.a.

    10.06% p.a.to 16.53% p.a.based on $30,000
    over 5 years

    $150.00upfront and $5.00/month

  • Promoted

    SocietyOne

    SocietyOne

    Unsecured Personal Loan - Excellent Credit (Fixed over 5 years)

    8.10% p.a.to 10.59% p.a.

    9.36% p.a.to 12.31% p.a.based on $30,000
    over 5 years

    $300.00upfront and $0.00/month

  • Promoted

    CUA

    CUA

    Discount Unsecured Personal Loan (Variable)

    10.89% p.a.

    10.89% p.a.based on $30,000
    over 5 years

    $0.00upfront and $0.00/month

  • Promoted

    RACQ Bank

    RACQ Bank

    Unsecured Personal Loan (Variable)

    12.95% p.a.

    13.25% p.a.based on $30,000
    over 5 years

    $200.00upfront and $0.00/month

*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 for the amounts and terms quoted, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans, and apply only to these examples. Different amounts and terms will result in different comparison rates. Full comparison rate schedules are available from lenders. Costs such as redraw fees or early repayment fees, and savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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