Whether it's a new kitchen or a full rebuild of the back half of the house, the way you fund a renovation can make a big difference to cost and stress. Here are the main options.
1. Savings or offset funds
Best for: small to medium projects
Using cash is the cheapest option if you have it. If your savings are in an offset account, remember that withdrawing them increases your interest. Still usually cheaper than borrowing.
2. Redraw
Best for: borrowers who've made extra repayments
If you've paid ahead on your loan, you can redraw funds. It's simple and uses your existing rate. Keep in mind the tax trap if the property might become an investment later.
3. Top-up with your current lender
Best for: medium projects, when your current rate is competitive
Ask your lender to increase your loan. You'll need enough equity (usually staying under 80% LVR) and to pass a serviceability assessment. Often quicker than refinancing.
4. Cash-out refinance
Best for: when you also want a better rate
Refinance to a new lender and borrow extra for the renovation. You get a fresh rate and the funds in one step. See our guide on cash-out refinancing.
5. Construction loan
Best for: major structural renovations, extensions, second storeys
Funds are released in stages as work progresses. Lenders want a fixed-price contract, plans and council approvals. Some lenders will lend based on the "as if complete" value, which can increase what you can borrow.
6. Personal loan or green loan
Best for: small projects, or when you don't have equity
Higher rates and shorter terms than home loans, but no security over your home. Some lenders offer discounted "green" loans for solar, batteries or energy-efficient upgrades.
Comparing the options
| Option | Rate | Speed | Typical size |
|---|---|---|---|
| Savings / offset | n/a | Instant | Any |
| Redraw | Home loan rate | Fast | Up to your extra repayments |
| Top-up | Home loan rate | 1 to 3 weeks | Medium |
| Cash-out refinance | New home loan rate | 3 to 6 weeks | Medium to large |
| Construction loan | Home loan rate | 3 to 6 weeks | Large |
| Personal loan | Higher | Fast | Small |
Tips before you renovate
- Get finance approved before signing a builder.
- Allow a contingency of 10% to 20%.
- Check council requirements for structural work.
- Speak to an agent about what adds value in your area.
- Keep a buffer. Renovations rarely come in under budget.
Frequently asked questions
Can I borrow more than 80% for a renovation?
Possibly, with LMI. It's often better to stay under 80%.
Will my lender value the property after renovation?
For construction loans, some lenders value "as if complete".
How long does renovation finance take?
From a few days for redraw to several weeks for a construction loan.
Planning a renovation? Call Finfident on 0424 545 654. We'll find the funding option that costs you least.
This article is general information only and doesn't take into account your objectives, financial situation or needs. Figures, rates and scheme rules are current as at October 2026 and can change. Finfident Finance Brokers (ABN 94 679 280 801) is Credit Representative 569374 of Outsource Financial Pty Ltd (ACN 131 090 705), Australian Credit Licence 384324.