Renovating your home is just as exciting as the day you first got the keys – it’s a journey, a confusing and stressful one, but exciting, nonetheless. You get to create your own vision and bring it to life in a property that you own!
Much of the confusion and stress around home renovations comes down to budgets, expenditure, and time frames. This article should provide you with some piece of mind, educating you on the ins and outs of renovation financing, loans, and budgets.
As interest rates continue to rise in Australia you might be in two minds about whether now the right time is to embark on your renovation journey. Let’s find out, together!
How Do I Fund Renovations in Australia?
With an open-ended question like this one there are varying answers and options that may be available to you. It’s important to remember that any financial advice you read online is general only and doesn’t consider your personal circumstances. Talking to a financial planner or other professional is recommended before applying for any home renovation loans.
The first option that Australians have to fund their renovations is by offsetting, redrawing, or dipping into savings. These three acts all fall under the umbrella of paying out of your own pocket.
If you want to avoid taking on more debt, this might be the option for you – renovators may withdraw money from their home loan’s offset or sell investments such as stocks or other property.
Offset accounts are fairly standard when it comes to home loans – they allow renovators to put money in an account above and beyond their home loan repayments, lowering the total interest payable, whilst also giving holders access to the additional funds should a time arise when they are needed.
It’s important to check with your bank or a financial advisor before redrawing on your offset account as this may be counterproductive, increasing the total interest you pay on your home loan. It could be cheaper to get another loan specific to the renovation!
If you want to dip into your savings to finance your renovation, it’s important to ensure you still have an emergency fund available for any unexpected expenses. If you want to know how much you should have access to for emergencies, reach out to a financial planner to set up an action plan.
Much like using your savings for your home renovations, selling investments can be just as risky. Markets are extremely volatile in 2022 so you need to carefully consider whether selling your investments is the best financial decision. Always remember that capital gains tax must be paid on any stocks you sell at a profit – this could lower the total amount you have access to if not considered.
Do People Take on Loans for Renovations?
Most Australians take out some credit product when they decide to renovate. Whether that is the options mentioned above or one of the multitudes of other options – you should be confident that you aren’t the only one borrowing money to build the home of your dreams.
Another option not mentioned above is that a personal loan may be applicable to your renovation plans. Typically, the maximum amount that you can borrow is $50,000, however, if your renovation plans are small this amount may suffice.
The benefit of a personal loan in this circumstance is that you can secure it with other assets you own, usually scoring you a lower interest rate. Despite this, personal loans are far more expensive than home loans as they are administered over a shorter period of time.
Can I Refinance My Home Loan To Pay For Renovations?
Yes!
This only applies to property owners who have built up a considerable amount of equity in their property. You’ll be able to leverage your equity to borrow the additional funds required to complete your renovations.
There are fees associated with refinancing a loan – the terms may change as well so ensure that you are well versed on whether it’s the right option for you. Speak to your financial advisor on your bank to obtain more accurate information about the current terms of your loan and if refinancing is the smart move, financially.
Can you include renovation costs in a mortgage in Australia?
Fortunately, Australian banks and lenders allow you to apply for a mortgage that is larger than the property value. Your current finances will be considered in line with company policies when doing this so ensure that you are clear on the amount you are seeking to borrow.
Going down this route may be a smart move, especially when interest rates are low. You’ll be able to lock in a lower rate for your renovations and have access to the funds to complete it right away.
Understandably, some lenders can be hesitant to approve a mortgage with a large excess, if you default the lender carries an extra burden of making up the left-over amount once the property is sold.
Which Bank Is The Best For A Renovation Loan?
The answer to this question varies from borrower to borrower – it’s almost impossible to give an indication to which bank is the best option for you. The big four in Australia all offer different loan products, at different rates, each with their own terms and eligibility requirements.
Australians tend to have a loyalty towards a bank they’ve been with for a long time. Don’t be afraid to shop around and find the best product for you. Financial planners have access to all the information that may be useful when deciding on your renovation loan rates.
Conclusion
We are excited for you, the journey towards your dream home is one of the best decisions you can make. Ensure you are properly educated prior to making any financial decisions – home renovation loans are expensive and not for everyone.
If you are in need of a loan for home renovations that cost $2000 or less, Fundo can help!
Why should I choose a home renovation loan with Fundo?
Here at Fundo, we understand that everyone’s financial circumstances, and renovation dreams are different. You might not need to loan as much as is traditionally offered with a bank, or for whatever reason, you’ve found yourself short of cash, be it a contractor that has gone over budget, or something important that you forgot to initially include in your budget, we offer fast turn around for loans of up to $2,000, and we can transfer the money to your account within minutes of approval. We also accept applications for loans for consumers with bad credit, so even if you’ve been turned away elsewhere, we can often help.
What is the application process to apply and get approved for a $2,000 loan online for home renovation expenses?
Our application process is all online and incredibly quick—around 3 minutes to complete. Fill out all your details on the application form and one of your friendly Fundo team members will assess your application. Best of all, applications submitted during business hours will be processed on the same day. We are also able to tell you whether you’ve been accepted almost immediately. Once approval has been confirmed, we can transfer your funds to you within 5 minutes and you can continue to make your home improvements!
Can I get a home renovation loan for $2000 with bad credit?
A bad credit score won’t stop Fundo giving you a loan. We offer no credit check loans as we understand that you are more than your credit score! As a responsible lender, we factor in more than your credit history, we consider your overall financial circumstances, such as your capability to repay the loan, your spending habits, and other financial commitments.