There are a variety of different types of loans that can be used to finance home renovations. The kind of loan that you may require depends on a number of factors, such as your budget, the cost of your renovation project and the amount of equity you already have in your property.
If you have at least 20% of the equity in your home, a home equity loan or mortgage top-up could allow you to borrow against that equity in order to fund improvements. These types of loans will often allow you to borrow at lower interest rates than a personal loan or utilising a credit card.
For large projects like major refits or building extensions, you may wish to consider a standalone construction loan, see more here. This type of loan is typically calculated using the projected market value of your finished property. Construction loans pay out funds in stages over the duration of the project, as opposed to a single lump sum.
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A fixed-price contract has a largely predetermined cost, making it ideal for projects that have a clear scope of work. It is generally easier to access financing for fixed-price contracts, because there is less risk involved for lenders and little danger of going over budget. With a fixed-price contract, the builder is obligated to complete the work within the timescale and budget agreed. However, variations to fixed-price contracts can still occur, especially in today’s market that has seen significant volatility in the price of building materials.
A self managed renovation is where the homeowner takes responsibility for managing the project and coordinating trades and contractors.
This approach can offer flexibility and greater control over the build, but it also requires careful planning and active management of timelines, costs, and contractors.
When assessing funding for a self managed renovation, lenders will typically look at the overall scope of works, budget, and available equity in the property.
If you are unsure about how to move forward with financing your home renovation project, Personalised Mortgages is here to help. Our friendly specialists can walk you through the different available options and help you to access great deals on renovation loans with New Zealand’s top lenders.
The best bank for renovation loans is the one that offers financing and rates that work well with your specific needs and circumstances. Mortgage Advisers often have relationships with numerous lenders and can work to find the best available deals to finance your renovation.
Whether you’re looking for expert mortgage advice to get you into your first home, or you’re upgrading, refinancing or looking for an investment property, our experienced team can help find the right solution for you.
