The Ultimate Guide to
Financing Home Renovations

If you’re considering renovating your home, you may be similarly considering how exactly you’re going to be able to afford it.

While home improvement loans are one option, there are a couple of ways in which you can finance your home renovations. In this article, we’ll introduce you to some of the most commonly accepted ways of paying for home construction.

Of course, we highly recommend speaking with a broker, such as our team at Loan Monster, before getting started. Depending on your financial situation and goals, there may be more and less beneficial ways of financing renovations for your particular circumstances.

How to Finance Your Renovation

Home renovations can be a very beneficial project. There is always the expansion or improvement of your living area to consider, but it also allows you to invest extra resale value into the property and ensure you gain as much use from the home as possible for as long as possible.

It is equally important that you start thinking about funding the project as well before you start engaging architects, designers, or contractors.

A home renovation loan is one of the most commonly sought-after channels of funding. However, you may not realise that there are actually a few different types of loan options available.

Mortgage Refinancing

With mortgage refinancing you are leveraging your existing equity in the home to provide funding for the renovation. Depending on the refinancing options available to you, this option can be an effective way to obtain a home improvement loan.

Cash Out Refinance

A cash-out refinance mortgage is where a new loan, higher than the current loan, is taken out. The difference between the two loans is then provided for in cash (or funding for use in renovation). This is another beneficial option that can help you access the fund you need as well as leverage your home’s equity. Often cash-out refinance mortgages enable you to benefit from lower interest rates than personal loans.

Personal Loans

A personal loan is an unsecured loan that can be ideal for small renovation projects due to the fact that they often require less lengthy approval processes. The funding obtained from a personal loan can be used for anything, including renovations. However, one drawback is that personal loans do tend to attract higher interest rates.

Construction Loans

A construction loan is more suitable for larger scale and extensive renovations. The loan is provided for in stages, meeting the process of construction, which is beneficial financially as it reduces the amount of interest you need to pay. Compared to the personal loan, which is provided for as a lump sum in the beginning and thus the interest is paid on the whole amount from the outset.


This last option on the list doesn’t require a loan at all. If you have the savings or cash flow to be able to afford the renovations without borrowing a cent, you might want to consider it. Of course, every person is different and has different repayment abilities, requirements, and situations. If, however, you find yourself considering selling off investments, dipping into emergency savings or putting yourself and your family at financial risk, we highly recommend you talk to a broker here at Loan Monster first.

Tips before seeking home improvement finance

It’s important that you understand the costs of the renovation project at hand and budget accordingly. Knowing an accurate and realistic figure of your intended renovations will allow you to determine what sort of home improvement finance option is best suited for your needs.

It can also be a smart idea to start liaising with and procuring contractors for the job to ensure that you’re able to complete the renovations on time or budget, otherwise your chosen renovation loan option may not stretch as far or wide as you need.

Trust the experts in home, mortgage, and construction loan Perth-wide

Here at Loan Monster, we eat all things mortgages and loans for breakfast. If you’d like to explore any of the above home improvement finance options in more detail or get some custom advice regarding your particular situation, make sure to reach out to us today. 


Are you looking to refinance? Want to buy your very first home? Need an investment property loan? We can take care of it all for you at Loan Monster. Get in touch with our team and let’s get started today.

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