Renovating your home is a great way to update your living space and potentially increase its value. However, the costs can quickly add up once labour, materials and unexpected expenses are factored in. If you don’t have the cash available, a renovation loan can give you the funds to get the work done without having to pay for everything upfront.
What is a home renovation loan?
A home renovation or home improvement loan is a personal loan that can be used to cover the cost of any improvement-related expenses around your home. Personal loans are designed to be flexible and can be used for a wide variety of purposes, which makes them a popular way to fund renovations.
Renovation loans come in two main forms: unsecured and secured. Unsecured loans tend to be easier to access and quicker to process, while secured loans (which use an asset like your car as collateral) come with a higher maximum borrowing power and lower interest rates.
What can I use my renovation loan for?
You can use your renovation loan for just about any home improvement expense you like, such as:
- Kitchen and bathroom remodelling
- Plumbing and electrical work
- Home repairs
- Building additional living space
- Adding windows or skylights
- Garden landscaping
- Installing a swimming pool
- Energy-efficient improvements such as solar panels
Because it’s a personal loan, you can also use your funds for non-renovation purposes, too, from consolidating existing debts to covering the cost of your next holiday.
How much can I borrow for my renovation loan?
The average amount requested through Savvy for home improvement expenses was $29,225 in 2025–26.
However, the maximum amount available can be as much as $75,000 on an unsecured renovation loan, and up to $100,000 with security.
Whether you’re able to borrow that much will depend on factors specific to your profile, including:
- Your income and expenses
- Your employment and recent working history
- Your credit score and history
- Your record repaying similar loans in the past
- Whether you choose a secured or unsecured loan
- Whether you have any dependants
- Whether you have any outstanding debts and their size
- Whether you have any lines of credit open (such as a credit card)
The stronger your overall financial position, the more likely you are to qualify for a higher loan amount.
How much will my renovation loan cost?
The cost of your renovation loan comes down to several key factors, including:
- How much you borrow: the bigger the loan, the more interest you’ll pay overall.
- Your interest rate: even a small rate difference can save hundreds of dollars over the life of the loan.
- Your loan term: stretching the loan out can reduce your monthly repayments, but you’ll pay more interest in the long run.
- Any fees: establishment fees and ongoing charges can add to the total cost.
Let’s look at this in practice. Say you borrow $35,000 over five years for a kitchen and bathroom renovation. Here’s how different interest rates could affect your monthly repayments and the total interest you pay:
| Interest rate | Monthly repayment | Total interest |
|---|---|---|
| 7.50% p.a. | $701 | $7,080 |
| 8.00% p.a. | $710 | $7,580 |
| 9.00% p.a. | $727 | $8,593 |
| 10.50% p.a. | $752 | $10,137 |
| These figures are examples only and don’t include fees. Your actual repayments will depend on the interest rate and loan terms you’re approved for. | ||
At 10.50% p.a., you'd pay around $51 more each month than at 7.50% p.a., and just over $3,000 more in interest across the five years.
Our calculator can give you an idea of what your repayments could be based on your loan amount, rate and term.
Personal Loan Repayment Calculator
It’s important to have an idea of what your loan might cost you overall before you apply. Fortunately, Savvy’s personal loan calculator is simple to use and lets you know how much your repayments could be.
Your estimated repayments
$98.62
| Total interest paid: | Total amount to pay: |
| $1233.43 | $5,143.99 |
The pros and cons of renovation loans
Pros
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No building plans needed to apply
You don't need building approval or a locked-in plans before you apply, which keeps the process simpler for smaller jobs.
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More freedom over how you spend the money
You can pay different tradespeople, buy materials yourself or change how you allocate your renovation budget without having to request progress payments from your lender.
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Flexibility repayments
Many personal loans allow extra repayments, giving you the option to pay the loan off sooner and reduce the interest you pay.
Cons
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Higher interest rates than a home loan
Personal loan rates are usually higher than home loan rates, particularly for unsecured loans, which can make them a more expensive way to borrow.
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Not suitable for all types of renovations
Structural work can fall outside a lender’s personal loan criteria, even if the amount you want to borrow is within the loan limit. In these cases, you’ll need to use a construction loan instead.
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Adds a second repayment on top of your mortgage
If you’re already paying off a home loan, a renovation loan gives you another regular repayment to budget for rather than adding the debt to your mortgage.
Renovation loan vs construction loan
If you need to borrow more than a personal loan's lending cap allows or you're planning major structural work, you’ll likely need to look at a construction loan instead.
Here's how the two compare:
| Renovation loan | Construction loan | |
|---|---|---|
| Suited to | Cosmetic and smaller-scale renovations, e.g. kitchens, bathrooms, flooring, landscaping | Major structural work, e.g. extensions, knockdown rebuilds, second storey additions |
| Amount available | Up to $75,000 unsecured or $100,000 secured | Sized to your build cost and assessed against factors such as your property value and equity |
| Loan term | 1 to 7 years | Short build phase (often12 to 24 months), which then converts into a standard home loan of up to 30 years |
| Security | Can be secured or unsecured | Secured against your property |
| Deposit required | No deposit required | A deposit or enough equity in your property is required |
| Interest charged | Charged on the outstanding balance from the day it's received | During construction, you only pay interest on the funds drawn so far. Once construction is complete, the loan moves to standard home loan repayments |
| How you receive funds | Paid to you as a lump sum upfront | Paid to your builder in stages as the build progresses |
| Use of funds | Can be used however you choose | Must be used for the approved building project |
| Paperwork needed | Standard ID and income documents | Building contract, approved plans and permits, builder and insurance details, and progress payment invoices. Valuations and additional quotes may also be required |
Lenders have their own rules around the types of renovation work they'll fund, and structural changes can rule out a personal loan even if the amount you need falls within its borrowing limit. In that case, a construction loan may be your only option.
If you're not sure where your renovation sits, check with your lender or broker before applying.
How to apply for a renovation loan with Savvy
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Complete our online form
Fill out details about yourself and the loan you’re after.
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Send us your documents
We’ll verify your identity and income.
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Get matched with a lender
We’ll assess your profile and walk you through your options.
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Have your application submitted
We’ll prepare everything and send it to your lender on your behalf.
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Receive your funds
Once your loan is approved and settled, the funds will be paid out.
Why apply for a personal loan with Savvy?
What are my other home renovation loan options?
Renovation loans and construction loans aren’t the only ways to fund home improvements. Depending on your circumstances, you may have other options available.
Refinance your home loan and access your equity
If you’ve built up enough equity in your home, you may be able to refinance your home loan and increase your mortgage to help pay for your renovation. Equity is the difference between your home’s value and what you still owe on it.
Because home loan rates are usually lower and repayment terms are much longer, adding the renovation cost to your mortgage can mean a smaller increase to your monthly repayments. The trade-off is that you could pay more interest overall if you leave that extra borrowing in your home loan for the full term.
Let’s look at an example of a $600,000 mortgage with 25 years remaining, with $30,000 added for renovations:
| Option | Loan term | Monthly repayments for first 5 years | Total interest |
|---|---|---|---|
| Refinance to a $630,000 home loan at 5.24% p.a. | 25 years | $3,772 | $501,463 |
| Keep your $600,000 mortgage at 5.24% p.a. and take a $30,000 renovation loan at 7.50% p.a. | 25 years + 5 years | $4,193 | $483,653 |
| Calculations are for illustrative purposes only. Interest rate may not be reflective of the rate you’re offered on your personal loan. | |||
In this example, refinancing would save around $422 a month for the first five years, but cost almost $17,800 more in interest if the extra $30,000 remained in the mortgage for the full 25 years.
You’ll also need enough usable equity to borrow the extra amount. Many lenders calculate this as up to 80% of your property’s value, minus what you still owe on your home loan.
These figures are examples only and don’t include fees. Your actual repayments will depend on the rates and loan terms you’re approved for.
Use your home loan redraw facility
If you've made extra repayments on your mortgage, you may be able to access that money through your redraw facility and put it towards your renovation.
This can be a simple way to fund the work without applying for another loan, and you can usually access the money as needed. However, taking funds back out increases your home loan balance, which means you'll pay more interest than if you left those extra repayments untouched. It can also undo some of the progress you've made in paying your mortgage down sooner.
Use your savings
If you have enough saved, you may decide to pay for the renovation yourself rather than borrow the money.
The obvious benefit is that you won't have another loan or interest bill to worry about. However, using a large portion of your savings can leave you with less of a buffer for emergencies or other plans. If those savings are sitting in an offset account, withdrawing them can also increase the amount of interest charged on your home loan.
