Home Loan Money – Renovate Without the Red Tape (2026)

Are you dreaming of a home makeover but feeling constrained by your budget? Whether it's updating a tired kitchen or adding a new room, renovations can enhance your living space and increase your property's value. But how can you fund this transformation? A common question among homeowners is whether they can use home loan money for renovations. Let's delve into this topic to find practical solutions for your renovation ambitions.

Understanding Home Loans for Renovations

Home loans are typically used to purchase a property, but many Australians are unaware that they can also be leveraged for renovations. Essentially, the funds you borrow through a home loan can be allocated towards improving your home, provided your lender permits it. This approach is especially popular when interest rates are lower than personal loans or credit cards, offering a cost-effective way to finance home improvements.

Current Market Rates and Options

As of 2026, the Australian home loan market offers several solutions for those looking to fund renovations through their mortgage. Interest rates for home loans currently range from 6.49% to 12%, depending on the lender and your financial situation. At Esteb and Co, we have access to over 83 lenders, providing a wide array of options to suit different needs and preferences.

Lender	Interest Rate	Loan Features
Lender A	6.49%	Offset Account, Redraw Facility
Lender B	7.25%	Flexible Repayments, No Annual Fee
Lender C	8.50%	Fixed Rate Option, Extra Repayments

When considering your options, it's important to evaluate the eligibility criteria. Typically, lenders will assess your credit score, current home equity, and income to determine your borrowing capacity. Generally, a strong credit score and substantial equity will improve your chances of securing favourable terms.

Steps to Use Home Loan Money for Renovations

To effectively use your home loan for renovations, follow these practical steps:

1. Assess Your Equity: Calculate how much equity you have in your home. This can be done by subtracting your remaining mortgage balance from your home's current market value.
2. Plan Your Renovations: Create a detailed renovation plan, including estimated costs and timelines. This will help you determine how much additional funding you need.
3. Consult with Your Lender: Discuss your renovation plans with your lender to understand their requirements and whether they allow for home loan funds to be used in this manner.
4. Consider Refinancing: If your current lender's terms are not favourable, consider refinancing with a lender that offers better conditions for renovation funding.
5. Finalize Your Loan Agreement: Once you have agreed on terms, complete the necessary paperwork to secure your loan funds for renovations.

Tips and Considerations

Here are some expert tips to ensure your renovation project is successful:

• Budget Wisely: Always include a buffer in your renovation budget to accommodate unexpected expenses.
• Choose Renovations Wisely: Focus on improvements that will add the most value to your home, such as kitchen and bathroom upgrades.
• Stay Informed: Keep up-to-date with market trends and interest rate changes to make informed financial decisions.
• Seek Professional Advice: Consult with a mortgage broker, like those at Esteb and Co, to explore all available options and find the best solution tailored to your needs.

Frequently Asked Questions

1. Can I use my existing home loan to fund renovations?
Yes, many lenders allow you to use your existing home loan for renovations, provided you have sufficient equity and meet the lending criteria.

2. What if my lender doesn’t allow using home loan money for renovations?
If your current lender does not permit this, consider refinancing with another lender that supports renovation funding.

3. How much can I borrow for renovations?
The amount you can borrow depends on your equity, credit score, and income. Lenders typically allow you to borrow up to 80% of your home's value.

4. Are there any tax benefits for using home loans for renovations?
Generally, interest on home loans for personal use, such as renovations, is not tax-deductible. However, if you rent out part of your home, you may be eligible for some deductions.

5. How can a mortgage broker assist me?
A mortgage broker, like those at Esteb and Co, can help you navigate different lender policies, compare interest rates, and find a loan that suits your renovation goals.

6. What should I do if my renovation costs exceed my loan amount?
It's crucial to have a contingency fund. If costs exceed your loan amount, you may need to adjust your renovation plans or explore additional funding options.