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Apex Alterations & Additions

How to Finance Your Home Addition/Renovation

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When it comes to getting the necessary funds to finance your home additions/renovation, there are many options available to you.

Should you get a personal loan? Refinance or redraw your existing home loan? Or seek out a building and construction loan?

Which option is right for you will depend on the scale and complexity of the renovation, your budget, and your ability to repay either a new loan or a higher rate on your existing loan repayments.

Keep reading to discover the benefits of each financing option for your next home addition/renovation. For advice on how to choose the right financing option for you, learn more.


Equity is the difference between the market value (and the banks valuation) of your property and the amount you still owe on your loan.

Equity is an asset, and is part of your total net worth. Depending on your circumstances, you may be able to access a portion or all of your equity in order to finance your home renovation.

The amount of equity you can access can increase over time if the market value of your property rises or you reduce the total amount of your loan.

One downside to accessing your equity is that it will increase the rate of your monthly loan repayments. Therefore, you should only consider this option if you’re confident in your ability to pay off a higher than usual monthly loan repayment rate.


At almost any time during the course of paying off your home loan, you have the freedom to switch lenders. This enables you to access features and benefits, along with a potentially lower interest rate, than what your current lender has to offer.

For these reasons, it’s a good idea to scope out the market every few years to see if a better deal is available to you. This is especially useful if you need access to extra funds to finance your home renovations, as a new lender may offer a wider range of financing options and more flexible repayment plans.

In some cases, you may be able to switch to a more suitable home loan deal, yet still stay with your current lender.


If you’re on a variable rate home loan, and you’ve been able to make higher than minimum contributions to your monthly loan repayments, you may be able to redraw from your existing home loan.

This involves you gaining access to those additional funds that you contributed and using them to finance your home renovation. So, in essence, you are ‘reclaiming’ all of those extra funds you’re ahead by.

One of the best benefits of this option is that most lenders don’t charge a redraw fee. However, keep in mind. the interest on your loan repayments will increase as your total loan amount will increase.


This is a special type of loan that many lenders offer. It is designed to help you gradually pay off the associated costs that come with home renovations including the cost of labour, materials, and other fees.

The great thing about a building and construction loan is that you only pay interest on each progress payment as they come, not the full amount upfront. So, let’s say you’ve received approval for a loan of $100,000, if you’ve so far only gained access to $50,000, then you only pay interest on that portion.

Throughout the course of building your home extension, both you, your builder and lender will be in regular communication with each other to ensure the necessary funds are being paid as the funding is required. Generally speaking, you will need to provide your lender with progress claim invoices before they pay for the next portion of construction.


This is a quick and easy way to finance small renovation renovations of around $5,000 to $10,000 or more.

Acquiring a personal home loan is generally faster and requires less paperwork than other financing options. Furthermore, you’re given the necessary finances in bulk upfront rather than in stages.

However, interest rates are typically higher than other types of loans, so it’s worth deciding if a personal loan is right for you.


Credit cards are another convenient way to get finance for home renovations with minimal fuss. They generally give you the freedom to pay for each individual purchase over time in easy instalments rather than a lump sum payment.

Shop around to find a lender who offers a competitively low rate card that suits your specific needs.

This doesn’t have to be the same lender you’re currently tied to for a home loan. However, sticking with the same lender may give you access to exclusive credit card deals that offer greater benefits than another lender.

In fact, if you already have a credit card and have accrued points, you may be able to use those points to fund a portion of the renovation.

For further advice on how to finance your home renovation, or to request a preliminary quote for the estimated cost of your next project, contact APEX Alterations & Additions today.

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