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The decision to renovate your home is a huge one.

Renovation and extension work can take time, money, and has disrupted the sanity of many a homeowner in years gone by. 

Still, the benefits of remodelling a home often outweigh the drawbacks, and might include:

  • Enhancing your property’s value
  • Tailoring your home to your lifestyle requirements
  • Accommodating for your evolving space needs (adding a bedroom or bathroom, perhaps)
  • Improved functionality and space utilisation 
  • Updated aesthetics and modernisation
  • Increased energy efficiency
  • Technology integration
  • And, of course, your emotional satisfaction and pride of ownership

Those are just a few potential benefits of renovating or extending a home. There are dozens, if not hundreds of reasons an Australian homeowner might choose to undergo a property renovation or extension.

Those that do, though, should take the time to fully consider all the ins and outs of home renovation before they begin. Doing so could help to avoid a hefty bill, a blown-out timeline, or an unsuccessful project.

#1. The scope of your home renovations 

Before you start scrolling Pinterest or researching trades, take the time to sit down and analyse what you want and need out of your home renovation.

After all, asking for quotes or advice on remodelling or extending a property is akin to asking ‘how long is a piece of string?’ The answer will differ depending on your house, the changes you’re after, your personal tastes, and your available budget. 

A few simple cosmetic upgrades are an entirely different kettle of fish to a complete overhaul or major extension.

The first thing an astute renovator would be wise to do is to sit down with their choice of beverage and a notebook to analyse what they wish to achieve from their home remodel or extension. 

#2. How you will achieve your house renovation, remodel, or extension 

After you’ve locked down what you want to achieve, the next question will likely be how

There are a multitude of ways to complete a renovation.

You might want to do the whole thing yourself, project manage individual trades, or you might wish to be completely hands-off and hire a building company to complete the project. 

How you choose to approach your renovation will likely play a large part in its cost. 

And what might appear the cheapest option now could work out to be more expensive in the long run. That’s perhaps most likely the case if you’re choosing to learn as you DIY.

At this stage, it’s probably worth considering various trades and reaching out for quotes, remembering the cheapest option isn’t always the best. 

It’s also important to consider your time commitment and skill level. What might take a professional five minutes could take an amateur DIYer a whole day. 

On the other hand, hiring professionals can ensure a high-quality finish in a short time frame.

That could be particularly helpful if a renovator chooses to live off-site during the works. However, it could also blow out a project’s budget. 

Finally, depending on what you want from your property remodelling, you might need to hire an architect or designer to create a plan to work off.

#3. How you will fund your home project

All that will likely lead an astute property owner dreaming of renovations to the ticket price of their vision. And that ticket price might leave them scrounging for cash.

According to the 2022 Houzz & Home Renovation Trends Study, Australian homeowners undergoing renovations spent a median of $30,000 in 2021, with those in the ninetieth percentile spending $230,000.

That’s far from pocket change for the majority of us. 

So, how can homeowners fund renovations? 


Perhaps the simplest way to pay for a renovation project is by using established savings. 

Paying with cash means there are no interest charges associated with a renovation.

However, it might also mean that a homeowner is left scrambling in the case of a budget blowout. 

Further, not all homeowners have a stack of cash tucked away in a savings account to put towards a renovation project.

If cash isn’t an option, there are plenty more available.

Equity accessed through extending home loan 

Those with a mortgage might be able to release equity from their home loan to fund their renovations. 

They may also consider refinancing to get access to the equity built into their bricks and mortar. 

See also: How to choose a home renovation loan

Line of credit

In a similar vein, some home loan products allow a borrower access to a line of credit, also known as an overdraft. 

A line of credit works similarly to a credit card, but the funds provided are attached to a home loan and thereby, typically come with a smaller interest rate.

Having instant access to potentially tens of thousands of dollars could be a game changer when renovating. 

However, a borrower will have to pay interest on the funds they pull from the line of credit facility. 

Credit card or personal loan

Personal loans and credit cards can also grant access to funds that can be used to pay for renovations.

The two products are typically easy to take out and various providers can offer various rates to various customers. 

It’s worth bearing in mind, though, that interest rates on personal loans are generally higher than those on home loans, and those charged on outstanding credit card balances are typically higher again.

Construction loan 

Finally, if you’re considering a major renovation, taking out a construction loan might be the way to go.

Funds from a construction loan are generally paid out by a lender as an owner needs them, with principal repayments beginning on completion of construction.

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
Principal & Interest
  • Low rates for purchase and refinancing
  • Simple online application process
  • No fees, unlimited redraws, 0.10% offset 
5.94% p.a.
5.95% p.a.
Principal & Interest
5.95% p.a.
5.95% p.a.
Principal & Interest
5.99% p.a.
5.90% p.a.
Principal & Interest
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .

#4. The cost vs property value add of renovations 

If you’ve got this far, congratulations. 

You’ve worked out what you want to achieve through renovating, remodelling, or extending your property, how you plan to reach your goals, and how you will pay for it.

Now, it's time to consider the risks that can come from renovating.

Namely, the risk that the cost of renovating or extending your property will be greater than the value-add of said renovation or extension. 

That’s called overcapitalising: To sink more money into a property than you could recoup by selling.

Perhaps the simplest way to avoid overcapitalising is to do your research.

Have a look at what properties similar to yours are selling for, compared to those similar to your end goal.

You might find that adding a pool at a cost of, say, $80,000, can only be expected to add around $20,000 of value to your property. 

Of course, if you want the pool to enhance your life, it might be worth the sunken cost. But if you’re adding the feature to attract a future buyer, it mightn’t be the best use of your cash.

Budget blowouts can also result in overcapitalisation. 

Be wary of projects that are at the top of your budget, to begin with, as you might be left with little wiggle room in case of an unexpected increase in costs. 

#5. Your limitations: Financial and otherwise 

Perhaps one of the most expensive mistakes a renovator can make is to begin work without taking into account their limitations. 

Nearly every episode of Grand Designs warns of the impact that rising costs, stretched timelines, and overzealous DIYs can have on a homeowner’s back pocket (not to mention their stress levels).

Another limitation to consider is that of local regulations.

For instance, if you’re making major changes to your property, you’ll likely need the permission of your local council. 

Going ahead without said permission can, in some cases, result in the whole project being torn down, and you might cop a fine to top it off. 

Photo by Roselyn Tirado on Unsplash