What You Need To Consider When Financing A Renovation

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Kiwi’s are known as keen DIYers & with reno shows like The Block, there’re more & more home owners giving it a go for themselves.

Perhaps you’ve been in your place for a while, thinking of selling, or have a rental property that needs a bit of attention. Whatever the situation, you’ll probably be needing some extra cash to fund your renovation project.

So, what exactly do you need to consider when it comes to financing a renovation?

Will I Be Adding Value?

Before you jump in boots ‘n’ all it can be worth your while actually making sure that your renovations are worth doing.

Generally, people renovate for one of two reasons

  1. Functionality & comfort – updating a space so if suits your needs & preferences more.
  2. Potential financial gains – adding value to your property

It’s a good idea to check out property condition & prices in your local area/suburb, particularly if this isn’t your ‘forever’ home.  You don’t want to spend $50k-$100k to only realistically increase the value of your property by $30k when you go to sell. Look around, chat to some local Real Estate agents to get their thoughts.

What could I borrow?

Once you’re certain you’re going to go ahead with the renovations – work out how much equity you have in your property. This will help you (or your broker) determine how much you may potentially borrow to finance the renovations.

If you’re looking at doing some substantial changes, engaging a valuer to value your property as it currently stands, & also project the value of your property after the renovations are complete is a good idea. And often results in your being able to borrow more.

Estimate Costings & Get Quotes

Bank always want to know what you plan to do with the funds they lend you. The more details you can give them & even providing a project plan definitely works in your favour.

Demonstrating you’ve done your research & are serious about the project, will mitigate any perceived concerns or potential risks from the bank perspective, making them more comfortable with lending you additional funds.

Also, it is wise to factor a 10% buffer into your lending request – in case there are any unexpected expenses such as increases in costs of materials, or labour costs.


Call In The Professionals

If something is outside your skill set definitely make sure you get the professionals in.

I know it can be tempting to save on costs & do it yourself, but more often than not, it leads to more headaches & less saving.

Renovations that go wrong can be extremely costly to fix – you end up paying someone to fix your error then actually do the work that you want.

So, work out what professionals you’ll be needing then ask around for recommendations. And don’t just go with the first person you see – get a number of quotes to make sure you find the right professional for you.


Whatever your reasons for renovating seeking good advice & thoroughly researching what you propose to do is a must. As Benjamin Franklin once said

“Failing to plan is planning to fail”

And don’t forget to get your mortgage broker onboard. Their experience & knowledge goes a long way to getting the ‘Yes’ you want from the bank & saves you a lot of hassle & stress.

  • Property Owners
  • Renovations
  • Rental Properties
  • Home Loan Tips