Borrow More for Renovations? Here's How to Get Approved

Renovating your home can be an exciting yet daunting prospect. Whether you're dreaming of a modern kitchen, an additional bedroom, or a complete home transformation, the question often arises: can you borrow more on your home loan for renovations? Understanding your options can be the difference between achieving your vision or having your plans stalled by financial constraints.

Understanding Borrowing More on a Home Loan for Renovations

Borrowing additional funds on your home loan for renovations is a common practice in Australia. This process, often referred to as a "home loan top-up" or "equity release," allows homeowners to access extra funds using the equity in their home. In simple terms, equity is the difference between your home's current market value and the outstanding balance on your mortgage. If your home has increased in value or you've paid down a significant portion of your loan, you may have equity that can be used to finance renovations.

Current Market Information: Rates, Requirements, and Options

In 2026, the Australian mortgage market is experiencing interest rates ranging from 6.49% to 12% for variable rate loans, depending on the lender and the borrower's financial profile. Fixed rates may vary slightly but generally fall within a similar range. When considering borrowing more for renovations, it's essential to understand the requirements and options available.

Eligibility for a home loan top-up typically requires a solid credit history, proof of income, and sufficient equity. Lenders will often assess the loan-to-value ratio (LVR) to ensure it remains within acceptable limits, usually not exceeding 80% of the property's value.

How to Borrow More on Your Home Loan for Renovations

Here are the steps to successfully borrow more on your home loan for renovations:

1. Assess Your Equity: Determine your current home equity by subtracting your remaining mortgage balance from your home's current market value.
2. Contact Your Lender: Reach out to your current lender to discuss your options for a top-up or equity release.
3. Prepare Documentation: Gather necessary documents such as recent payslips, tax returns, and a detailed renovation budget.
4. Submit a Loan Application: Apply for the additional funds, ensuring you meet all eligibility criteria.
5. Consider Lender Options: If your existing lender's terms aren't favourable, explore options with other lenders. Esteb and Co, for instance, can connect you with a wide panel of 83+ lenders to find the best deal.
6. Approval and Funding: Once approved, the additional funds will be made available for your renovation project.

Tips and Considerations

Before proceeding with borrowing more for renovations, consider the following expert tips:

• Budget Wisely: Ensure your renovation budget is realistic and includes a buffer for unexpected costs.
• Future-proof Your Home: Opt for renovations that add value and appeal to future buyers.
• Consult Professionals: Engage architects or builders for accurate cost estimates and quality work.
• Review Loan Terms: Carefully review the terms and conditions of the loan to avoid future financial strain.
• Seek Professional Advice: Consult with a mortgage broker like Esteb and Co to explore various lender options and secure competitive rates.

Frequently Asked Questions

1. Can I use my home equity to fund any type of renovation?

Yes, you can use your home equity to fund a range of renovations, from minor updates to major structural changes, as long as it aligns with lender policies.

2. How much equity do I need to borrow more for renovations?

Typically, lenders require that your total loan-to-value ratio (LVR) does not exceed 80%, meaning you should have at least 20% equity remaining post-borrowing.

3. How long does it take to get a home loan top-up for renovations?

The process can vary, but it usually takes between 2 to 4 weeks from application to approval, depending on the lender and complexity of the renovation.

4. What if my current lender's terms are not favourable?

If your current lender's terms are not ideal, consider shopping around. Mortgage brokers like Esteb and Co can provide access to a wide range of lenders to find better options.

5. Are there any risks associated with borrowing more on my home loan?

Yes, increasing your home loan can increase your monthly repayments and the total interest paid over the life of the loan. Ensure your budget can comfortably accommodate these changes.

6. Can I refinance to borrow more for renovations?

Yes, refinancing your home loan is another option to access funds for renovations, potentially allowing you to secure better interest rates and terms.

7. Do I need council approval for my renovations?

Depending on the scope of your renovations, council approval may be required. Check with your local council and obtain necessary permits before starting work.