Not every renovation needs the same type of finance — a new kitchen and a full structural rebuild sit at very different points on the spectrum.
Smaller renovations often use existing equity
For cosmetic or moderate renovations, many homeowners simply redraw available funds or apply for a 'top-up' on their existing loan, using equity built up in the property, without needing a new loan product entirely.
Larger or structural work may need a construction-style loan
Renovations involving structural changes typically need a construction loan structure, with funds released in stages against a builder's contract, similar to building a new home from scratch — see our article on construction loans for how that generally works.
A valuation is usually required either way
Whether it's a top-up or a dedicated renovation loan, lenders generally want an updated valuation, sometimes 'as if complete', to confirm the property will support the additional lending once work is finished.
Chris Brown
Managing Director & Finance Broker at New Vision Financial Services, a credit representative under Australian Credit Licence 384704 and a member of the FBAA and AFCA. More about Chris →
Frequently asked
Can I redraw funds for any renovation?
If you have available redraw and the work is relatively minor, often yes — but for larger amounts, lenders may still want to know the purpose and may require evidence of the work being carried out.
Do I need council approval before applying for renovation finance?
For structural work, yes — lenders typically want evidence of the necessary approvals before releasing funds for work that requires them.
Will a renovation definitely increase my property's value by more than it costs?
Not necessarily — this depends on the renovation, the local market and a range of factors outside a loan's control. It's worth researching this separately from the finance question.