Written byShaun McGowan
Wanting to do some renovations and thinking of financing it with a home renovation loan? The first thing you’ll be asking yourself is what interest rate you’ll get, and how your credit score will affect your rate and chances of approval.
Before you apply, take a minute to check your credit score, understand how it works and how to improve it, and find out how to get a better renovation home loan interest rate as a result. Doing this could save you thousands over the lifetime of your loan… money that you can spend on adding a pool, spa, extra bedroom, or simply upgrading your choice of materials to finally create your dream home.
Your credit score, which reflects your ability to make repayments as a trustworthy borrower, is used by lenders to calculate your renovation home loan interest rate. The higher your credit score is, the lower your level of risk is as a result, and the better your chance at gaining approval and a great interest rate.
Lower credit scores don’t necessarily mean you will only be approved for renovation loans with high interest rates, it just means that you’ll likely need to go to a lender who specialises in bad credit personal loans.
If you are only taking your credit score in to account when applying for a renovation home loan:
It’s also important to understand that interest rates aren’t the only indicator of a good deal on renovation finance and that renovation home loan interest rates are determined by many factors, not just your credit score:
Important: Before you agree to a renovation home loan, you’ll want to fully understand and assess the impact any monthly fees may have on both your monthly repayments, and total loan repayment amount.
If you’re more interested in saving money than just getting a good deal, it’s important to consider the length (term) of your loan. The sooner you repay your loan amount, the greater the amount of total interest you will save.
If you’re wanting to get a better renovation home loan interest rate by improving your credit score, you have two main options to consider.
Only you will be able to decide which option is more suitable for your situation.
You can check your credit score for free and without any impact on your credit score with Money Matchmaker®.
You'll need to create an account with these details:
Your score won't be negatively affected and we protect your data with encryptions.
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Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.