How do you actually pay for a renovation?
There are five honest routes, and the right one depends on the size of the job and how long you want to pay for it. The map below, without rates or product names: those change monthly and belong to your broker, not to a cost guide.
The five routes
- Savings: the cheapest money there is. Common for jobs up to a new bathroom or kitchen; keep an emergency buffer untouched.
- Remortgaging or a further advance: borrowing more against your home, usually the lowest rate, repaid over the mortgage term. Fits big jobs (extensions, lofts, whole-house work); the trade-off is decades of interest on the borrowed sum.
- A secured (second charge) loan: also against your home but separate from your mortgage; useful when remortgaging would lose you a good fixed rate.
- A personal loan: unsecured, faster, higher rate, shorter term. Fits mid-size jobs; the shorter term often means less total interest despite the higher rate.
- Grants for energy work: heat pumps come with substantial government support; see the honest comparison in the heat pump guide.
The order that protects you
Price the job first with the free calculator and real quotes, add 10 to 15 percent contingency, then borrow that number and not a guess. Check the budget planner for when the money actually leaves, so the borrowing lands before the big payment moments rather than after. And compare total cost over the life of the borrowing, not just the monthly payment; a whole-of-market mortgage broker can show both in one sitting.
What this page is not: financial advice. It is the map, so the conversation with your bank or broker starts informed instead of hopeful. Nothing here earns us a commission; there are no product links to sell you.
Frequently asked questions
Should I arrange the money before or after getting quotes?
Price first, borrow second. Get your estimate and at least three itemised quotes, add 10 to 15 percent contingency, and take that number to your lender or broker. Borrowing a guessed amount either leaves you short mid-build or paying interest on money you did not need.
Is adding the renovation to my mortgage always cheapest?
Per month usually, in total not necessarily: mortgage rates are lower than loan rates, but you repay over decades, so the total interest can end up higher than a shorter loan. The honest comparison is total cost over the life of the borrowing, and that is exactly the sum to ask a broker to show you.
Can I borrow against the value the renovation will add?
Only partly: most lenders base the loan on the current value of your home, not the finished one. Some renovation-specific products release money in stages against the works. If your plan depends on the after-value, discuss it with a whole-of-market broker before you commit to a builder.