Question 1

What is the difference between a Construction Loan and Personal Loan?

Accepted Answer

Construction Loans are used for major works which involve structural changes to the property. Unsecured Personal Loans are used for minor alterations and smaller renovation projects.

Question 2

What is the best loan to finance renovating and installing a new kitchen?

Accepted Answer

Where no internal walls are being removed, a new kitchen would be considered a small project which may be funded with an Unsecured Personal Loan.

Question 3

What is the interest rate on a home improvement loan?

Accepted Answer

The interest rate on finance to carry out property improvements will depend on the lending product selected and the financials of the homeowner. Rates advertised by lenders may be used as a guide.

Question 4

How does a drawdown facility on a renovations loan work?

Accepted Answer

Major renovation works funded with a Construction Loan may include a drawdown facility. This allows for the funds to be available to the homeowner at the start of the project. The homeowner can access funds to pay the invoices for the works as needed. Interest is charged only on the amount used over the time used.

Question 5

What costs can be covered with a home improvement loan?

Accepted Answer

Subject to the borrowing capacity of the homeowner and the loan amount approved, all inclusions in the project may be covered with finance. These include the cost of tradespeople, fixtures, fittings, materials, appliances and other items.

Question 6

What deposit is required for home improvement loans?

Accepted Answer

Where major works are carried out by a builder, lenders generally require a 15% deposit on Construction Loans. Where the work is being undertaken by an owner-builder, a deposit of up to 50% may be required.

Question 7

Are rates on home improvement loans fixed or variable?

Accepted Answer

Renovation and alteration finance is generally available at a variable interest rate.

Question 8

Are design plans required to get approved for home renovations finance?

Accepted Answer

With major projects, lenders require Council-approved plans and the builder's quotes as part of the application form. Projects in excess of $1m in value also require a Quantity Surveyor Report.

Question 9

Can I get finance for renovations if I&#8217;m doing the work myself?

Accepted Answer

Yes. Loans can be approved for renovations carried out by an owner-builder.

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