Renovation Loans Gold Coast

Renovation Loans on the Gold Coast

Australia is a nation of renovators, with the national house construction market size at $75 billion in 2022. While we’ve always suspected this to be the case (just look at our long-standing love affair with reality TV shows such as The Block and House Rules), it’s now been confirmed thanks to studies carried out by the Australian Bureau of Statistics and the National Australia Bank (NAB).

In 2021, Australians poured a massive $12.3 billion into house renovations — doubling the national cost of renovating house from a decade ago. The last quarter of that year had 14% of us renovating home, with 29% of renovators saying completing renovations have become harder. The same data set also showed that a lot of renovators are motivated to take on home reno projects and apply for renovation loans to increase their home’s value and livability.

If you are one of those wanting to improve their homes, you will be please to know that there are several different options to get loans for home renovation. How can you decide which renovation finance option is right for you? Start by talking to an experienced broker.

What are renovation loans?

Renovating your home can be a great way to improve its appearance and make it more comfortable to live in. Some people choose to renovate their homes when they first move in, while others wait until they’ve lived there for a while and know what changes they want to make.

In Australia, there are many different types of house renovation loans available that can help you finance your renovation project. But when it comes to renovation loans how they work is a question we often get asked.

Renovation loans Australia help homeowners avoid incurring additional interest over the life of their existing mortgage. It can be used for house repairs and improvements like adding new furniture, an extra room, or an outdoor kitchen. A renovation loan can also be used to finance substantial renovations meant to increase the property value of homes.

Taking out a home renovation loan means you pay a lot less in interest as the loan term is considerably shorter: 1-7 years instead of 30 years on a regular mortgage.

Renovation Loans Gold Coast

How much to renovate house on the Gold Coast?

If you’re thinking of renovating your home on the Gold Coast, you’ll need to factor in the cost of materials, labour and permits. Depending on the size and scope of your project, the total cost can range from a few thousand dollars to hundreds of thousands.
Things to account for when deciding what your renovation budget will look like

When it comes to home renovations, there are a lot of things to consider – especially when it comes to budget. If you’re an Australian homeowner considering a renovation home loan, here are a few things to think about.

First, how much can you realistically afford to borrow? This will depend on a number of factors, including your current home loan repayments, how much equity you have in your home, and your overall financial situation. It’s important to get an accurate picture of your finances before you start planning your renovation.

Second, what kind of home renovation are you looking to do? Are you planning a major overhaul or just some cosmetic updates? The scope of your project will have a big impact on the overall cost as it will determine what kind of labour you need, how many people you need to hire, the kind of materials needed, and the timeline of the home reno project. So it’s important to have a clear idea of what you want to achieve before you start looking at numbers.

Finally, what is the expected return on investment for your home renovation? This is an important consideration, especially if you’re planning to sell your home in the future. While there’s no guarantee that your home will increase in value after a renovation, it’s worth doing some research to see what other homes in your area have sold for after similar renovations.

By taking the time to consider all of these factors, you can develop a realistic budget for your home renovation. Having figured all these out, you can then start looking at your options for renovation home loans.

PRO TIP: Add 10% to the total renovation costs. This extra budget will make room for unexpected setbacks.

What Are Your Options for a Renovation Loan on the Gold Coast?

There are several different finance options available to homeowners planning a renovation on the Gold Coast. These include:
Refinance your existing mortgage
If you’ve built up equity in your property, then you may be able to refinance your home loan to access this equity. What is equity? It’s the difference between how much you owe on your home loan and what your property is actually worth. If you have a house valued at $500,000, and you owe $275,000 on your mortgage, then you have $225,000 worth of equity in your home. When you refinance to access equity, you’re essentially transferring your existing home loan to a new lender (or a new loan product with the same lender) and then borrowing an additional percentage (which is added to your current mortgage balance). This is a great way to access cash for a renovation while still maintaining a low interest rate.
Get a mortgage top-up
Depending on your existing home loan structure, you may be able to secure a mortgage “top-up”. These added funds can then be used to pay for your renovation. This is similar to how a refinance option would work, but it means you keep your existing home loan product and remain with the same lender.
Redraw from your mortgage

If your existing home loan has a redraw facility, then you have the option of redrawing any additional repayments you have made over the life of the loan. For example, imagine you first got your mortgage 5 years ago. In addition to your minimum monthly repayments, you’ve been paying an added $500 per month onto your mortgage. After 5 years, you will have paid off an additional $30,000, and these funds can now be redrawn to pay for your renovation.

Apply for a personal loan
If you’re planning a small renovation, then a personal loan may be a good finance option. A personal loan can be unsecured and will often allow you to make additional repayments (so you can pay off the loan earlier). Additionally, a personal loan will generally have a much lower interest rate than a credit card.
Obtain a construction loan

A construction loan is a type of renovation loan specifically for large home construction projects, including new builds, knock-down/rebuilds, extensions and substantial renovations. With a construction loan, a lender will approve you to borrow a set amount of money, which can be accessed via progressive drawdowns. The great thing about a construction loan is that you are only charged interest on the percentage of the loan that has been drawdown. So, if you’re planning an extensive renovation that is going to take 9 months to complete, you won’t be paying interest on the total loan value until after the project is finished.

Renovation Loans Gold Coast

How to qualify and apply for a renovation home loan

It goes without saying that each lender will have their own eligibility criteria for processing applications on home loans for renovations. That said, below are the basic qualifying criteria:

Applying for a home renovation loan is not that different from applying for a standard home loan. You only need to submit an application to a lender, meet their approval criteria (e.g., good credit score, stable income, equity in your home, etc), and sign a loan contract and agree to the terms of the loan.

As with any other loan, you may want the assistance of a professional mortgage broker. They can help you with several aspects of your renovation loan application including sorting your paperwork, demonstrating your financial capability, and shopping around for great loan products.

Assisting with a Home Renovation Loan – Gold Coast

At Professional Lending Solutions, we have an expert team of brokers who can assist homeowners with organising a renovation loan on the Gold Coast. How do we figure out what type of renovation loan will present the best solution for your project?

We start by taking the time to talk to you. Rather than try and rush you through the process, we’ll ask questions, do research and consider your current financial situation. Only once we have all of the relevant information will we start making suggestions, which will be based on our years of industry experience and up-to-date lending panel.

The Benefits of Using a Broker for A Renovation Loan – Gold Coast

While it is possible to approach a bank directly for advice about a home renovation loan on the Gold Coast, doing so will severely restrict your options. In contrast, when you talk to the team at Professional Lending Solutions, you can rest assured that you’ll gain:
Renovation Loans Gold Coast
Trustworthy advice

Brokers are governed by legislation commonly referred to as ‘Best Interest Duty.’ Basically, this means that we are legally required to only ever act in your best interests. We won’t recommend a finance solution unless we genuinely believe it is the best possible option for you (it’s worth noting that banks are NOT subject to ‘Best Interests Duty’).

Renovation Loans Gold Coast
Wide range of lenders
We have access to an extensive lending panel, which includes loan products from the major banks, smaller banks and even independent lenders that you’ve probably never heard of. Why is this a good thing? Because it means we can select from a broad range of loan products. We can find a loan that not only offers a great interest rate, but that will also offer the loan structure best suited to your situation.
Renovation Loans Gold Coast
Industry expertise
It is possible for a determined homeowner to do their own extensive online research and compare loan products from a wide range of lenders. It is also theoretically possible for a homeowner to attempt a complete DIY renovation, despite having no construction experience. But online research will only ever get you so far. If you want the best possible result, it’s well worth using a professional with years of nuanced industry experience (this applies to your finance and your renovation!).

Frequently Asked Questions About a Getting a Renovation Loan – Gold Coast

Anyone who is:

  • 18 and above;
  • an Australian citizen or permanent resident; and
  • has proof of income that you can demonstrate capability to service the loan;

can be eligible for a renovation loan. A mortgage broker can help you find a lender that could accept your qualifications based on your financial records and has the right loan for your needs.

It depends on the type of renovation loan you opt for and the amount of equity you have built in your home. In general, you can borrow between $2,000 to $100,000 — or more. Talk to your lender to determine how much you can borrow and what loan type is best suited for you.
You could be looking at up to seven years to service your renovation loan. Again, it depends on the type of renovation loan and the amount of equity you have built in your home.
When evaluating renovation finance options, there are a few things you’ll need to consider. First of all, what kind of features does your existing home loan have? Do you have a redraw or top-up facility? Have you been making additional repayments to increase your equity? Another thing to think about is the size of your planned renovation. If it’s a simple kitchen or bathroom upgrade, then a personal loan could be a solution. If you’re planning a significant extension or a knock-down/rebuild, then a construction loan may be more suitable. Here’s a rule of thumb: construction loans may be suited to large, high-cost renovations, while personal loans may be better for smaller, low-cost renovations. To ensure you find the right finance option to suit your renovation needs, the best thing to do is talk to a broker at Professional Lending Solutions.

A construction loan is a little different to a typical mortgage, so you will need some additional documentation (besides the usual proof of income, proof of identity, etc.). A lender will want to see what’s involved in your proposed construction project, to make sure you’re not overcapitalising. So, they’ll typically ask to see project plans and specifications (showing what materials you’re planning to use), a copy of the proposed building contract and quotes for any extra works that won’t be included in the contract (like having solar panels or a new pool installed).

One important thing to remember with a renovation loan on the Gold Coast is that it’s essential to do thorough research and include all applicable costs. When you’re obtaining a mortgage to buy a new home, you know exactly how much that property is going to cost you on settlement day, so it’s easy to say how much money you need to borrow. But renovation projects aren’t like that. They’re made up of many smaller costs, some of which may fluctuate as the project progresses (for example, if asbestos is discovered). In addition to factoring in all relevant expenses (including necessary building and planning permits), you’ll also need to have a contingency plan that will allow you to deal with any budget blowouts.

With a construction loan, funds are released in predetermined stages. The various progress payments required by your builder will be clearly defined in your building contract (usually a percentage of the project total). As each stage of the project is invoiced, your lender will release the corresponding percentage of your loan to pay the builder. The lender will only charge you interest on the money that has already been released, not on the total balance of the loan.

For example, imagine you have a construction loan totalling $215,000. Your builder might charge you 5% for preliminary works (obtaining permits, etc.) and then 15% for the demolition. At this stage, you’ll have only accessed 20% of the total loan. So, you’ll only be charged interest on $43,000 (20% of the total) instead of $215,000 (100% of the total). This will save you a significant amount of interest throughout the project. If you obtain an interest-only construction loan, then you won’t have to start making principal and interest payments until after the project is finished and the interest-only term has expired.

We always recommend that your first step applying for a renovation loan — or any type of finance solution — should be to find a mortgage broker who can help you in all stages of the application process. From there, everything else becomes less complicated than it would be if you were to do it yourself or to approach a lender directly. With a mortgage broker on your side, you are assured that you are able to receive advice that meets your objectives, financial situation and needs. A mortgage broker is legally bound to act in your best interests.

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