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Renovating your home

Thinking of renovating your home?
Take the time to consider what’s involved, the right way to go about it, and whether it’s even a wise move in the first place. Here are some questions you should ask before you jump in.

Where do I start?

Renovating is a great option if you’ve found a property with potential in a location you like.

It’s not to be entered into lightly though.

Make sure you’ve got a firm grip of the numbers to ensure you don’t overcapitalise and that the cost of your home won’t be at the expense of your lifestyle.

Things to bear in mind

Be wary of overcapitalising

Overcapitalising is when someone spends more on renovation than they’d get back if they sold. For example, spending $20,000 on a new kitchen that only increases the value of your home by $10,000 means you’ve overcapitalised by $10,000.

Research your builder

It's essential you use reputable tradies. Are they licenced? Do they guarantee their work? What type of insurance do they have? Do you need any special insurance? What are their payment terms?

A personal loan might suit you better

If what you’re planning costs under $50,000 and your home loan is inflexible, you may want to consider taking out a personal loan.

Can I finance my renovation with my current home loan?

Depending on your current home loan, its flexibility, and how much you’ve already paid off, you may be able to use it to pay for your renovations. There are two main ways of going about it.

Redraw from your loan

If you’ve been paying more than your minimum repayments and are ahead with your loan, you might be able to withdraw the extra money. Redrawing from your loan can be very quick, won’t need approvals, and in many cases is free of charge.

Top up your loan

A 'top up' is basically an extension of the amount you’ve already borrowed without the need to take out a whole new loan. If you have a variable home loan with Great Southern Bank, you can top it up by as little as $10,000. Note that this will increase your repayment amount and add extra interest to your loan.

Can I take out a new loan for my renovation?

If you require more funds than you can access via redrawing or topping up your home loan, there are a couple of options available to help you achieve your dream.

Construction loan

A construction loan is a separate loan specifically for renovation. However, you can access the funds as progress payments instead of one lump sum.

For example, instead of taking out a $100,000 loan and having most of it sit there for six months, you might receive $40,000 to pay the builder when the first stage of the renovation is complete. You might then receive a second amount at completion of the next stage and so on, thereby keeping your interest down.

Great Southern Bank has variable rate home loans that can be used as a construction loan, so choose the one that best suits your needs.

Refinance your loan

If refinancing, you’d take out a brand-new home loan up to 80% LVR of your property’s current market value, pay out your old home loan, and use the difference to fund your renovation.

Refinancing your home loan may attract extra fees if you’re paying out a fixed rate home loan, so be sure to make sure the benefit outweighs the cost.

To learn more, please see our dedicated guide to refinancing.

What’s a comparison rate?

Every lender has an interest rate as well as additional expenses such as establishment or monthly fees. A low interest rate might sound good but could effectively be wiped out by these. To ensure you’re comparing ‘apples’ with ‘apples’, comparison rates give you a better idea of the true cost of the loan, factoring in any additional fees to standardise the offer.

Choose your own home loan
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Important information

Please note that this is only intended as a general guide in relation to issues you may want to consider when buying your first home. It is not intended to be an exhaustive list of all relevant issues and you should take into account your own particular circumstances, and obtain independent expert advice where needed, before proceeding. Rates and savings quoted are indicative only for illustrative purposes.

Great Southern Bank is a business name of Credit Union Australia Ltd ABN 44 087 650 959, AFSL and Australian Credit Licence 238317. Lending criteria, limits, conditions, and fees apply. Applications are subject to credit approval.

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Pre-approval means that a lender has agreed to lend you an amount of money in-principle, but the loan hasn't been proceeded to full or final approval.

While pre-approval is not a fully approved loan it can help you narrow your search, negotiate, and make an offer with certainty and confidence.

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First Home Guarantee
Family Home Guarantee
Regional First Home Buyer Guarantee

The Australian Government has introduced initiatives to support eligible Australians to build or purchase a new home sooner: the First Home Guarantee, Family Home Guarantee and Regional First Home Buyer Guarantee.

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