If your new year’s resolution revolves around transforming your home from drab to fab, there’s no better time to start the process than now. Whether your house is need of a small cosmetic makeover or a complete home renovation you might be wondering how you will be able to fund it? Fortunately, there are many finance options available to turn your dream into a reality. Duncan Thompson Extensions is the leading choice for home renovations in Melbourne, with over 30 years’ experience delivering high quality extensions on time, and on budget. Let’s have a look at a number of ways you can fund your renovation.

Equity Release / Top Up Home Loan

Equity is the difference between the bank’s valuation of your house and the amount you still owe on your mortgage. Using the equity is one of the most common ways homeowners fund renovations, and it involves borrowing against the current value of your home, before any value-adding renovations. Interest rates on home equity loans are lower compared to personal loans or credit cards, however, you will have larger mortgage, which means repayments will increase and it will take longer to pay off.

Construction Loan

If you’re planning to completely transform your home with a small extension or undergo a complete knock-down rebuild, this option allows you to spread the cost over a long period of time. With a construction loan, the lender will take into account the value of your home after the renovation based on the building plans so you can borrow against that value. This type of loan is not given to you upfront, it will be in staggered amounts over a period of time, allowing you to pay your invoices as they arrive.

Line of Credit

Once you have equity in your property, you can refinance with your current or a new lender to a line of credit loan. This works by providing a revolving loan facility that can be accessed whenever you want, and you can re-borrow the funds once you have paid off the balance. Interest is only charged on the balance owed not on the total loan amount, however, you will be charged a higher interest rate compared to the standard variable rate available and there may also be fees for using the facility.

Personal Loan

Ideal for a small makeover or minor renovations, personal loans often have a lower interest rate than credit cards, but higher than those on home equity loans. Personal loans are usually capped at $30,000 and re-payments typically need to be made over a maximum period of seven years.


Depending on your lender, if you have variable rate home loan and you’ve made additional repayments on your mortgage, you may be able to dip into those funds to use for your renovation. Not all home loans have a redraw option, and there may also be a limit on the amount you can redraw.

HomeBuilder Grant

Introduced in June 2020 as part of the COVID-19 economic recovery plan, HomeBuilder is a Commonwealth grants program that provides eligible owner-occupiers with a grant to build a new home or substantially renovate an existing home. The scheme has been extended to 31st March 2021, with a $15,000 grant available for building contracts signed between 1st January 2021 to 31st March 2021. To be eligible for the grant, you must meet a number of criteria.

Each applicant must be:

– a natural person (not a company or trust),

– aged 18 years or older at the date of the contract, and

– an Australian citizen at the date of application.

The property price must not exceed $750,000 and it must be your principal place of residence after completion.

For more information visit HomeBuilder Grant guidelines | State Revenue Office (sro.vic.gov.au).

Obtaining the finance for home renovation in advance will help you work out how much you have to spend, so you can create a realistic budget and stick to it! For more information or advice on the best options for your situation, contact your lender or bank.

If you are looking to extend or renovate your Melbourne house, Duncan Thompson Extensions is your number one choice. Committed to innovative design and high quality workmanship, we work will collaboratively with you to deliver a dream home renovation that far exceeds your expectations. Get in touch with us on (03) 9836 8655 or enquire online now.