The best ways to fund your renovation

Personal Finance · 10 Dec 2019

Whether you've just bought a new house or you want to make changes to the place you've called home for a while, house renovation projects can make a big difference…

Whether you've just bought a new house or you want to make changes to the place you've called home for a while, house renovation projects can make a big difference to your life at home.

Before you begin a renovation, the most important thing to consider is whether it will add value to your home. While you may be looking at the short-term benefits, knowing that what you're doing has long-term benefits too can help you avoid making a costly mistake.

While some projects are fairly affordable, if you want to make major changes then you could be looking at spending tens of thousands on improvements. There are many different ways to get the funds you need – including cash, credit cards, personal loans and extending your mortgage – and each has its pros and cons. Read on to find out which might be best for you.


If you have the money available, there's no better way to pay for home renovations. You can get what you want when you want it, and there's no need to pay interest or loan fees.

Unfortunately, very few of us are in a position where we can pay for large renovations out of our pockets. If you're not far off with your savings, you might wish to wait until you reach your target, but that's not always an option.

Rather than wait for a day when you've managed to save up, taking out a loan means you can improve your home sooner rather than later.

Credit card

Credit cards are an easy way to access extra money when you need it, but there's plenty of small print that you have to navigate too.

It's advisable to use a credit card only for small purchases and to be wary of how long it will take to pay back the debt. If your card has an interest-free period, you could save a bit of money during this time, but be aware that the majority of credit cards charge a higher interest rate than other forms of borrowing.

While it might seem like a shortcut to have multiple credit cards to cover a renovation project, this can have an impact on your ability to take out other loans. Plus, the trouble of keeping track of multiple credit card debts and repayment dates can lead to missed deadlines and late payment fees.

Redrawing on your mortgage

Depending on how you've structured your mortgage, you may be able to redraw against it for the cash injection you need.

In most cases, you can only reborrow money that you've paid in advance – so if you've only been keeping up with minimum repayments, or you've only just taken out your mortgage, you might not have much (or any) that you can draw on.

However, if you've been paying ahead, redrawing on your mortgage could be a cost-effective way to add to your renovation fund.

Refinancing your mortgage

If you've made a heavy dent in your mortgage, but aren't actually ahead on repayments, you can try to refinance your home to raise the capital required. This generally involves shopping around lenders to find a better deal, but you can also refinance with your current mortgage provider.

The downside of refinancing is that you're lengthening the time it takes to pay off your mortgage and increasing the overall interest you have to pay. You may also end up back into the mortgage insurance category, adding another cost to your venture.

Personal loan

Personal loans are a great way to get an extra bit of cash when you need it. These are normally quicker than other finance options and you can be clear of the debt quicker than you would with one of the mortgage options – which means the interest you pay should be lower too.

On Harmoney, we have the option for people to apply for home improvement loans so our lenders know what you're planning to do. With up to $2,000 available from 5.76% p.a. (6.55% p.a.), depending on your circumstances, you have the flexibility to get the amount you want for your project.

Because of Harmoney's modern approach to loans, 99% of approved applications are funded within 24 hours of going on our marketplace – meaning you can get started very quickly and don't have to delay your home makeover.

Other articles you might like:

Why extending your mortgage can hurt

Keep your D.I.Y on budget

Managing your money in your 30s and 40s

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