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Renovations can be expensive. Before you apply for a personal loan, estimate the scope of your project and get multiple quotes from various contractors.

  • Refinancing and equity release: generally used if you have excess equity in your home.
  • Personal loan: generally used for small, low- to mid-cost renovations under $50,000.
  • Construction loan: generally used for large renovations over $150,000 in value.

Picking the right option could save you thousands of dollars in interest and fees so before you even pick up a hammer it’s important that you give serious thought to how you’ll fund your renovations.

Key features of a home renovation loan:

Who is eligible for a home renovation loan?

  • Borrow from $2,000 to $75,000
  • Fixed or variable interest rates
  • Repayments to suit your budget
  • Terms from 1 to 7 years (most common is 3 years)
  • Secured & unsecured options
  • Australian Permanent Residents (& some visa holders)
  • Must be over the age of 18
  • Earn a minimum of $25,000 a year

Shopping around for the right loan can save you thousands of dollars in interest and fees.

Quick Links

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The cost of renovating

Renovations, alterations and additions to your home will vary in cost depending on the scope of your project, the cost of labour and materials, and other facts. Before committing to a renovation loan, you will need to accurately scope the cost of your renovations.

Factors that can influence the cost of your project include:

  • The size of your home and the number of rooms
  • How much of your home you plan to renovate
  • The cost of materials (budget to premium)
  • The cost of labour and whether you plan to do any work yourself
  • The type of rooms you plan to renovate (kitchens and bathrooms tend to cost more than bedrooms and outdoor areas)
  • How invasive your renovations will be (structural renovations are generally more time-consuming and costly than minor cosmetic alterations)

In a recent release addressing home renovation loan costs by Australian lender, SocietyOne, which covers how to financially prepare for your next renovation, the lender details the average price of the most commonly renovated areas of a home.

Average costs of home renovations in Australia by room

AreaAverage PriceCommon Costs
Kitchen$10,000 - $45,000Labour, appliances, fittings, flooring, structural changes
Bathroom$10,000 - $35,000Labour, tiling, fixtures
Bedroom$2,000 - $35,000Labour, structural changes
Living Room$10,000 - $15,000Labour, flooring, furniture
Outdoors$2,000 - $10,000Labour, landscaping, structural changes

Source: SocietyOne Personal Loans

Money Tip:
Properly scoping your renovation project and getting comparable quotes from multiple contractors before committing to a loan is the first step toward keeping your renovations within budget.

Personal loans for home renovation

Best used for: home renovations under $50,000

Personal loans can be a simple, straightforward way to fund renovations. You can use the Money.com.au smart form to compare your options for home renovation loans in less than 5 minutes - see how much you can borrow and which lenders you qualify with, completely free of charge.

Home renovation personal loans have shorter terms than a mortgage or larger loan, with terms generally offered between three and seven years. Borrowing limits range from $2,000 to $75,000, and they may also have higher interest rates than home loans and construction loans.

Compare your available options before applying to determine which type of loan is most suitable for your project budget and personal financial circumstances.


  • Quick, easy application
  • Simple loan structure
  • May have low fees

Construction loans for home renovations

Best used for: Large renovations over $150,000

Construction loans are designed to cover the expenses you incur when building or substantially renovating your home. They’re structured a little differently than regular home loans to make the process as simple as possible.

To apply, you’ll usually need a signed all-inclusive contract with a builder, including quotes and plans. After your lender approves your application, they will generally pay out funds in stages as needed to complete the construction. These payments will often be made directly to your builder.

During the building phase, construction loan repayments will generally only require you to cover interest charges, before reverting to a standard principal-and-interest mortgage once construction is complete.

It’s important to note that these loans are not built for small renovations and often have loan minimums of $150,000.


  • Designed specifically for large renovations
  • High loan limit ideal for large renovations
  • Interest-only during the construction period

How to qualify and apply

Every lender has different eligibility criteria for a home renovation loan, but the most basic qualifying criteria requires you to be:

  • Over the age of 18; and
  • An Australian citizen or permanent resident; and
  • Employed, with a regular source of income that you can demonstrate

The most important factor when gaining approval for a home renovation loan is to demonstrate your ability to repay the full loan amount to your lender.

If you meet the basic eligibility for a personal loan, you will then need to compare lenders and assess their individual approval criteria.

To get apply for a home renovation loan you will need to:

  • Submit an application to a lender
  • Meet the lender’s approval criteria
  • Sign a loan contract and agree to the terms of the loan

You will need to provide personal identification and financial documents (usually your bank statements or recent payslips), as lenders will need to assess your financial stability and determine if you can service the loan amount.

Money Tip:
It’s a good idea to leave an extra 10% in the budget just in case your renovations end up costing more than you expect.

Here are the most popular questions people are asking about home renovation loans:


Is there any financial assistance available for renovations?


Check to see if you qualify for any of the government’s current grants for homebuilders and homeowners. You can find more information about available grants on the Australian Treasury website.


What’s the best way to fund renovations?


The best way to fund renovations depends on your financial circumstances and the cost of your renovations. Construction loans may be suited to large, high-cost renovations, while personal loans may be better for smaller, low-cost renovations.


Can I get a construction loan for renovations?


Yes, you may be able to get a construction loan to renovate your home. However, you’ll need to supply your lender with a deposit of 5% or more, a signed building contract and quotes to as well as meeting their credit criteria.


Can I pay for renovations with my existing home loan?


In some cases, you may be able to open a line of credit without refinancing your home loan. Speak to your lender to find out more.

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