Financing a home renovation with a personal loan

Whether it's a fresh paint job or a kitchen upgrade if you're planning to finance your home renovation Mozo's expert personal loan comparisons are here to guide you. Compare loan features, fees, and interest rates from leading lenders and apply today!

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Last updated 22 June 2024 Important disclosures and comparison rate warning*
  • Mozo Expert Choice Badge
    Unsecured Personal Loan


    interest rate
    comparison rate
    Monthly repayment
    6.75% 26.95% p.a.
    6.75% 26.95% p.a.based on $30,000
    over 5 years

    Borrow up to $50,000 unsecured. Perfect if you earn more than $22,100 p.a. and have good to excellent credit. Multi-year winner of Mozo’s Experts Choice Unsecured Personal Loan Award, 2021, 2022, 2023 & 2024^'

    Repayment terms from 2 years to 7 years. Representative example: a 5 year $30,000 loan at 6.75% would cost $35,430.23 including fees.

  • Unsecured Personal Loan


    interest rate
    comparison rate
    Monthly repayment
    5.76% 24.03% p.a.
    6.55% 24.98% p.a.based on $30,000
    over 5 years

    Fast, easy and 100% online, this is a low cost loan with no ongoing fees or extra repayment penalties. It's perfect for savvy borrowers with great credit. If you’re over 18 and earn above $30,000, you could qualify (other eligibility criteria may apply).

    Repayment terms from 3 years to 7 years. Representative example: a 5 year $30,000 loan at 5.76% would cost $35,173.52 including fees.

  • Mozo Expert Choice Badge
    Low Rate Personal Loan

    Excellent Credit

    interest rate
    comparison rate
    Monthly repayment
    6.57% 8.48% p.a.
    7.19% 8.84% p.a.based on $30,000
    over 5 years

    Competitive low rates for borrowers with excellent credit on 1-7 year loans from $2,001 up to $75,000, plus free extra repayments. Winner of Mozo's Experts Choice Excellent Credit Unsecured Personal Loan 2024 and Excellent Credit Secured Personal Loan 2024 awards ^. Min. income of 25k after tax, to apply.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.57% would cost $35,528.12 including fees.

  • Debt Consolidation Loan

    interest rate
    comparison rate
    Monthly repayment
    5.76% 24.03% p.a.
    6.57% 24.99% p.a.based on $30,000
    over 5 years

    Roll multiple debts into one loan to streamline your finances with one set of repayments and one interest rate. Competitive fixed interest rates with no monthly or early repayment fees and flexible repayment options. Easy online application and funding in as little as 24 hours (subject to approval).

    Repayment terms from 3 years to 7 years. Representative example: a 5 year $30,000 loan at 5.76% would cost $35,173.52 including fees.

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Renovation loans

If you’ve been watching the paint on your walls chip away for far too long or have been meaning to replace some cracked bathroom tiles, a home renovation loan can be a great way to fund your reno projects with minimal fuss.

Whether you’re a DIY queen or the king of contracting, it’s important to get informed on the ins and outs of these loans.

What is a home renovation loan?

A renovation loan functions much the same as any other personal loan, but instead of being focused on paying for a new car, a medical procedure, or a holiday, they are specifically aimed at doing up your digs.

Home renovation loans allow you to borrow a lump sum of money, paid back over a set term along with interest and any additional fees. 

  • Loan repayment calculator: You can use the Mozo loan repayment calculator to work out how much you can afford to borrow for home improvements.

With these loans being designed to specifically fund home renovations, there are a few key things to keep in mind.

How much do home renovations cost?

Depending on your plans, home renovations can cost you anywhere from a couple of hundred to the kind of million-dollar drop you’ll see on Grand Designs

There has been a steady increase in the amount of money spent on home renovations, doubling in the last decade (per ABS statistics). Meanwhile, building expenses have also seen an increase alongside the overall cost of living

If you’ve already taken the Mozo team’s tips for renovating on a budget, you might be looking for something more serious. Some common uses for renovation loans, many of which can add value to your property, are:

  • Swimming pools

  • Kitchen renovations

  • Bathroom remodelling

  • Solar panel installation

  • Extensions

  • Added storage

  • Landscaping

  • Repairs

Depending on which type of renovation you are opting for, data from Suncorp shows that the average spend on home renovations varies from state to state. The national average is roughly $63,118, while some states spend much more than others on home improvement: 

  • VIC: $71,067

  • TAS: $67,416

  • NSW: $66,609

  • QLD: $60,560

  • ACT: $58,466

  • WA: $54,377

There are other ways to pay for home renovations and to supplement renovation loans. It is fairly common for people to use equity on their homes or refinance their mortgages, as well as digging into savings. If you've made considerable extra repayments into your home loan, you may want to consider the differences between a personal loan and a home loan redraw.

Generally speaking, a loan is an option for when you know roughly how much you want to spend and have a plan for paying it back off.

What types of home renovation loans are there?

Like with all personal loans, there are multiple kinds of loans for home renovations. 

Green loans: 

If you're doing renovations to make your house more environmentally friendly or to use less energy, you may qualify for a green loan. While these all have different requirements, they are great for adding things like solar panels, insulation, or rainwater tanks. Green loans are generally attractive for their lower interest rates. In combination with certain government programs designed to make green renovations more cost-effective, you can bring down the cost of these changes.

On top of that, there are certain types of loans to look for:

  • Fixed rates: Your interest rate stays the same for the life of your loan, making it easier to budget. This is an attractive option if you're worried about a rate hike down the track in a rocky financial climate, but they do tend to be attached to higher interest rates and more rigid conditions.

  • Variable rates: These rates are subject to change over the course of the loan. These rates are generally lower and have more flexible features (like early repayments and redraws), but the interest rates can rise over time. 

  • Unsecured loan: An unsecured loan is not held against anything - it is cash borrowed dependent on your credit score and a risk assessment of the lender. These loans tend to have higher interest rates but also don’t put your property at risk.

  • Secured loan: Secured loans generally have lower interest rates, but they use an asset as collateral. This means a car, a property, or some other valuable possession is put up against the loan, and if you default on the loan, this property can be repossessed by the lender.

What should I look for in a renovation loan?

Whether they’re features, flaws, or options, there are some things to watch out for with any home renovation loan:

  • Fees: All loans have fees attached, and you can save a lot by watching out for loans with surprising hidden fees. You will almost always find an application fee for a loan, but there can also be fees for late payments, early payments, redraws, and all sorts of other unexpected things.

  • Loan term: How long the loan will last. Most personal loans last between 1-7 years, and this impacts how much interest you will pay. The shorter the length of your loan, the less interest you will pay, but the more your repayments will be.

  • Comparison rate: A comparison rate factors in the interest rate and the fees you’ll be charged with a specific loan. Often, comparing home renovation loans based on the comparison rate (rather than the advertised rate) gives you a more accurate idea of the full cost of the loan. Note that the comparison rate is generally based on a set scenario (i.e. either a $30,000 loan paid off over 5 years or a $10,000 loan paid over 3 years), so your actual loan will vary in its specifics.

  • Extras: Additional perks like free extra repayments or a flexible repayment schedule can give you the opportunity to pay off your loan earlier and save on interest. Watch out for things like early break costs, which might make it not worth your while to aim for early repayment.

Other renovation costs to keep in mind:

Home renovations can be quite difficult to predict.

While you might set out to spend $25,000, it’s very easy to get wrapped up in renovations and find yourself going over budget. Whether it’s pricey custom cabinetry or plumbing that just doesn’t want to follow the rules, it’s wise to build a little buffer into your budget when it comes to home renovations.

As many renovation costs pair with labour, you will also find that the longer things run for, the more they cost.

How do I apply for a home renovation loan?

The application process for a home renovation loan will differ from loan to loan, and you'll generally need to show evidence of your financial standing and history for the lender to make an accurate risk assessment. If you have good credit, you should be able to apply without issue - though the application process can be lengthy.

If you are looking to give your home a little extra lift - and boost up your property value - work out how much you can afford to borrow with our loan repayments calculator and check out our picks for the best personal loans.

Personal loan vs. renovation loans: Is there a difference?

For the most part, no. Personal loans can be used to finance a number of things, such as holidaysmotorcycle purchases and even medical debts. Using a personal loan is a popular choice to fund your small-scale renovations.

If you’re looking to fund larger renovations, refinancing your home loan, or taking out a construction loan might be better options.

What should I look for in a renovation loan?

When choosing a personal loan to renovate your home, there are some key features you’ll want to look at, such as:

  • Competitive interest rate: Your interest rate will play a big part in what your renovation loan repayments will look like. Saving a few bucks a week might not seem like much now, but can add up to thousands of dollars over the life of your loan, so it’s important you snag a great deal.
  • Low fees: As with any loan, something you might not expect that can sting you is fees. The types of fees you need to look out for are upfront application fees or set-up fees, ongoing service fees, late payment fees and loan discharge fees. These can add an extra margin onto your debt in addition to your interest, so make sure you’re reading the fine print so you don’t get caught out paying more than you need to.
  • Flexible features:. Renovating a home can be a strain on the budget, so it’s important you have flexibility in what your repayment schedule will look like. You can often opt for weekly, fortnightly or monthly repayments so you can better manage your debt. Another handy feature to look out for is the ability to make fee free extra repayments, which will allow you to pay off your loan faster, and a redraw facility in case you’re in a pinch and need access to the extra money you paid.

How much will a renovation loan cost me?

If you’ve got your eye on a shiny new basin, you’ve got to think beyond just the original quote price and take into consideration loan interest and fees, and the length of time you need the loan for.

You can use Mozo’s renovation loan calculator to figure out what your weekly, fortnightly or monthly repayments might look like and how much you can expect to pay in interest in total. Keep in mind that in order to keep your repayments low, your first step is finding a low rate renovation loan.

How can I get the best home renovation loan rate around?

Once you’re ready to make your dreams of an amazing outdoor deck area a reality, your next step is to snag a competitive interest rate. Here are some ways you can make sure you’re getting a great deal: 

  • Keep your credit in good shape. Keeping your credit score healthy by staying on top of other loan repayments is a great way to catch yourself a good interest rate because many lenders have tiered interest rates based on your credit history. Making sure you always make regular repayments and aren’t building up too much debt will be great for your credit score.
  • Ask for a better deal. Don’t be afraid to pick up the phone or go into a branch and simply ask your lender for a better rate. Depending on your situation, your lender might even waive introductory fees, helping you get off on the right foot.
  • Compare your options. To make sure you’re getting a great deal, it’s important you look at interest rates from different lenders. Mozo makes it easy for you by putting competitive renovation loan interest rates side-by-side to help you compare renovation loan options.

Should I get a renovation loan or use my credit card?

If you’re stuck on whether to use a credit card to finance your home renovations or whether to take out a loan, know that it’s likely to come down to your borrowing needs. Personal loans offer benefits such as lower interest rates, consistent repayments and a set borrowing amount, which is good for those on a strict budget.

If you opt to use a credit card to fund your renovations, you might be able to save on interest if you’re making smaller, incremental purchases and paying them off before you have the chance to build too much debt. If you’re going to do this, go with a low-interest credit card and shop around for added benefits such as interest-free periods or no annual fees.

For a more in-depth guide on ways to finance your home renovation, check out our home renovation funding guide.

Are renovation loans for home buyers and renovation loans for homeowners different?

Your options for funding your renovations will differ based on if you’re a first-home buyer or homeowner.

If you’re a first-time home buyer who has just taken out a large debt in the form of a home loan, it might be hard to secure a separate renovation loan. Instead, if your budget allows consider borrowing more from your home loan lender to make your necessary renovations. Keep in mind that by tagging it onto your 30-year mortgage, it will build up significant interest over that period of time, so whenever you can, put extra funds towards your home loan.

If you’re an existing homeowner, you have options at your disposal. For a smaller renovation loan, you can choose to get a secured loan, which will generally have a lower interest rate, but you will need to offer up an asset (i.e. your home) as security in case you default on the loan. Don’t like that idea? You could also opt for an unsecured loan. These generally have higher interest rates but offer flexibility, so if you do have extra funds, you can pay out the loan early without penalties.  

Can I still get a home renovation loan with other debts?

Most Aussies are carrying some form of debt, whether that be with their mortgagecredit card debt or car loans. As long as you’re staying on top of repayments and keeping your credit in top shape, and your budget can easily handle the extra repayments, your chances for renovation loan approval should be high.

To improve your chances of getting approved, here are some steps you can take:

  • Start small: The bigger the loan, the bigger the risk, so asking for a smaller loan could be your best bet. Your lender might also place a premium on your interest rate if you’re viewed as risky, so starting small could be a good way to make sure you can actually keep up with repayments and not dig yourself a hole.
  • Don’t apply too many times: Multiple applications don’t look promising to your lender, and champagne tastes on a beer budget won’t get you very far - so making sure you’re only applying for a loan amount you can actually afford is the first step to getting approved.
  • Prove your reliability: Your lender determines your reliability based on your credit score, so you’ll need to work out a budget and stay on top of repayments on your other debts to prove your steadiness.

How do I apply for a renovation loan?

Most renovation loan applications can be completed online, making it easier and faster for you to get approved. Your first step in applying for a renovation loan is comparing different personal loan options in the comparison table above to find a deal that suits your needs. Once you’ve done that, click the blue ‘Go to site’ button, which will take you directly to where you need to be on the provider’s website.

A few things you’ll need to have on hand before you start your application are proof of identity such as a current passport or driver's license, proof of income such as your pay slips, and financial documents such as bank statements, assets, debts and liabilities.

For residents of NSW and Victoria's capital cities, it may be worth checking out Sydney personal loans and Melbourne personal loans for some location-specific loan options.

Personal Loan Reviews

Newcastle Permanent Unsecured Personal Loan
Overall 9/10

Overall they are good but they don't take into account people work and can't answer phone calls even after you've asked to email instead

Read full review

Overall they are good but they don't take into account people work and can't answer phone calls even after you've asked to email instead

Customer service
Shaye, New South Wales, reviewed about 1 month ago
Commonwealth Bank Unsecured Personal Loan
Overall 3/10
At least help us out with ATM fees

Overall I'm not too happy with the banks in general. I think they are greedy and don't offer much incentives

Read full review

Overall I'm not too happy with the banks in general. I think they are greedy and don't offer much incentives

Justin, Western Australia, reviewed about 1 month ago
Commonwealth Bank Personal Loan
Overall 6/10
Easy service but not the best fees

Commonwealth bank being the largest bank has the comfort of being reliable and was also willing to provide a loan when other banks were not. Customer service is easy to get in contact with. I wouldn't say the fees are the best in the market though.

Read full review

Commonwealth bank being the largest bank has the comfort of being reliable and was also willing to provide a loan when other banks were not. Customer service is easy to get in contact with. I wouldn't say the fees are the best in the market though.

Customer service
Joshua, Victoria, reviewed 3 months ago

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