Using your home loan to renovate
Yes, you can usually use your home loan to pay for a renovation. There are four ways to do it: money you've already paid ahead, a top-up against your equity, a construction-style loan paid out in stages, or a separate personal loan. Which one fits depends mostly on the size of the job, and on whether it's cosmetic or structural.
The four ways to fund a renovation
Redraw or offset.
Spend money you've already paid ahead on your loan or hold in an offset account. Usually nothing new to apply for, but it uses up your buffer.
A top-up.
Increase your loan against the equity in your home, with your lender or a new one. Suits work you can price up front.
A construction-style loan.
The lender pays the builder in stages as the work is done, usually against a fixed-price contract. Usually needed for structural work.
A personal loan.
Unsecured, so it doesn't touch your home loan, but usually at a higher rate and over a shorter term. Suits small jobs.
Which route suits which job
Small and cosmetic.
Paint, flooring, a kitchen or bathroom refit with no walls moved. Redraw, offset or a top-up usually covers it.
Larger, but still cosmetic.
A full kitchen and bathrooms, landscaping, a deck. A top-up, often with quotes for the lender.
Structural.
Moving or removing walls, an extension, a second storey, changes to the roofline or major plumbing. Usually a construction-style loan.
Cosmetic or structural: the line that decides the loan
Cosmetic work changes how the home looks. Structural work changes how it stands: load-bearing walls, extensions, the roofline, foundations or major plumbing and drainage. Where exactly a lender draws the line is its own call, and it can differ from what a builder calls structural.
That line matters because structural work usually brings council approval, a licensed builder, a fixed-price contract and payments in stages, and many lenders will only fund it that way. Ask before you sign with a builder, not after.
Council approval is a lending condition too
If the work needs approval, the lender will usually want to see it, or the plans submitted for it, before it lends. Approval takes time, so build it into your plan: a loan approved before the council approves the work may not be able to pay out until it does.
Today's value, or the value once it's done
A top-up is usually lent against what your home is worth today. A construction-style loan can be assessed against what it's expected to be worth once the work is finished, on a valuation of the plans and contract. Not every lender does that, but where one does, it can be the difference between a job you can fund and one you can't.
How much equity you can actually use
Equity is your home's value less what you owe, but you can't borrow all of it. Most lenders will lend up to 80% of the value without lenders mortgage insurance, so the usable amount is 80% of the value less your current loan. Above that, insurance usually applies. And whatever the equity, your income still has to cover the bigger loan.
What a renovation adds to the value, and what it doesn't
Not every dollar spent comes back in value. Work that fixes a problem a buyer or valuer would mark down, or brings a tired home up to the standard of the street, tends to count. Work beyond what the street supports often doesn't. It's worth knowing the difference before you borrow for it, especially if you're counting on the value to refinance or sell later.
If the job costs more than planned
Renovations run over. Leave a buffer above the quoted price, and know before you start how you'd fund an overrun. On a construction-style loan, the lender usually wants you to pay any extra yourself before it pays the next stage, so an overrun with no buffer can stop the job halfway.
What a lender usually wants before it releases the money
Quotes or a building contract, with a fixed price for structural work.
Plans and council approval where the work needs it.
The builder's licence and insurance.
Progress inspections before each stage is paid, on a construction-style loan.
Your income and spending, assessed on the new, larger loan.
Building or adding a second home?
A full knock-down and rebuild is a construction loan. A granny flat has its own page.
Renovation loan questions
Yes, usually. You can use money paid ahead on the loan, increase the loan against your equity, take a construction-style loan paid in stages, or use a separate personal loan. The right one depends on the size and type of the work.
Planning a renovation?
Tell me what the work is, roughly what it'll cost, and what you owe on the home. I'll tell you which route fits, what your lender would want to see, and whether another lender would do it better.
You'll hear back within the hour in business hours, and by 9am the next business day after hours.
Updated 3 October 2026