Financing Your Renovation: A Complete Guide

Thinking about giving your home a facelift? You're not alone. Home renovations continue to trend across Australia as homeowners look to improve their existing properties rather than face the competitive buying market.

But before you start knocking down walls or picking out fixtures, there's an important question to answer: How will you fund your renovation project?

Understanding Your Finance Options

When it comes to borrowing for renovations, there are typically two main approaches:

1. Cashout Financing

If you've built up sufficient equity in your property, you may be able to borrow against your home's existing value. With this approach:

• Funds are deposited directly into your account

• Funding is based on the current value of the property 

• You manage payments to tradies and suppliers yourself

• You have more flexibility in how and when you spend the money

This option works well for smaller renovations or when the project isn’t  the work being completed isn’t deemed to be a structural change to the property. 

2. Progressive Funding (Construction Loan)

For major renovations, particularly structural changes or extensions, a construction loan may be more appropriate. With this approach:

• Funding is based on “on completion” value of your property after renovation

• The lender holds 100% of the approved funds

• Money is released in stages as work is completed

• The bank will require a fixed-price building contract

• Inspections may be required before releasing funds for each stage

This option provides additional oversight and can be reassuring for larger projects where significant funds are involved.

Planning for the Unexpected

One crucial piece of advice: always build in a contingency fund. Even with the most detailed plans and experienced builders, unexpected issues can arise once work begins. We typically recommend setting aside an additional 10-20% of your renovation budget for contingencies.

These funds can cover:

• Structural issues discovered during demolition

• Necessary repairs that weren't visible beforehand

• Changes to materials or designs during the project

• Delays that might increase labour costs

  
  

Your Step-by-Step Guide to Renovation Finance

Step 1: Confirm Your Financial Position

Before falling in love with renovation ideas or talking to builders, speak with us to understand what you can realistically afford. We'll help you determine:

• How much equity you can access

• What your new repayments would look like

• Which finance option suits your project and circumstances

  
  

Step 2: Discuss Financing Options and Budget

We'll walk you through:

• Interest rate options

• Loan structure considerations

• Repayment calculations

• The documentation you'll need

  
  

Step 3: Obtain Detailed Plans or Drawings

Having accurate representations of your existing space will help builders provide more precise quotes. Consider services like:

• Little Hinges -  here 

• Renovare – here

These providers can create professional plans that will be valuable throughout your renovation journey.

Step 4: Initial Builder Enquiries

When approaching builders, focus on:

• Getting ballpark cost estimates

• Assessing their communication style and reliability

• Checking their understanding of your vision

• Reviewing similar projects they've completed

Remember, you'll be working closely with this person or team for weeks or months—ensuring you're comfortable with them is essential.

Step 5: Formalise Your Builder Agreement

For financing approval, you'll need to provide:

• A fixed-price building contract outlining the total cost and payment stages

• A detailed specifications list of materials and inclusions

• Comprehensive plans showing the proposed changes

Once these documents are in hand, we can proceed with securing your formal finance approval.

Additional costs you may need to consider

• Council Development Submissions/Approvals

• Certification Costs for larger projects

• Increased Home Insurance cost after completion

• Owner Builder Insurance if you are considering that option

  
  

Ready to Start Your Renovation Journey?

Renovating can add significant value to your home while creating a space that better suits your lifestyle. With the right financial structure in place, you can undertake your project with confidence.

Contact our team at Astute East Brisbane to discuss your renovation plans and finance options. With over 20 years in the finance industry, we've helped countless homeowners turn their renovation dreams into reality—often with more affordable repayments than they expected.

Contact Us

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Disclaimer:

Astute Financial Management Pty Ltd | ACN 093 587 010 | Australian Credit Licence 364253 | Davgan Insurance & Wealth Pty. Ltd. T/As Astute East Brisbane Corporate Authorised Representative (425641) of Alliance Wealth Pty Ltd | ABN 93 161 647 007 | AFSL 449221. www.centrepointalliance.com.au/aw | General Insurance provided by Astute Insurance Pty Ltd | ABN 59 622 582 236 | Authorised Representative of Ausure Pty Ltd ABN 94 096 971 854 AFSL 238433. Health Insurance products are underwritten by St Luke’s Medical and Hospital Benefits Association ACN 009 479 618 (St.LukesHealth), a registered private health insurer, [trading as Astute Simplicity Health] and members are introduced by Astute Financial Management Pty Ltd or related entities (collectively known as Astute) for which Astute receives a commission.

General Advice Warning: 

This communication contains general information only and in no way constitutes the provision of professional advice, nor should it be relied on as a substitute for financial, credit, accounting, legal or other professional advice. We have not taken into account your financial situation, investment objectives or particular needs. Before making an investment or financial decision, a person must seek appropriate independent professional advice and also consider whether this information is appropriate to their needs, objectives and circumstances. The author as well as their representatives, agents and employees give no guarantees and make no representations, express or implied, as to the accuracy, currency, completeness or suitability of the information contained in this document. Nor do they accept any liability whatsoever as a result of any information herein being incorrect, incomplete or unsuitable or as a result of a person in any way using or relying on the information herein.