Home renovation loans are set to be a major focus in 2026, as more homeowners choose to upgrade their current property instead of facing the high costs of moving. With rising property prices and expenses like stamp duty adding pressure to household budgets, renovating is often the smarter financial decision.
If you’re planning a kitchen makeover, home extension, or full interior upgrade, understanding your home renovation loan options can help you avoid budget stress and keep your project on track from start to finish.
Why More Homeowners Are Renovating Instead of Moving
Homeowners are investing heavily in improving their properties, spending over $1 billion every month on renovations. But this isn’t just about style — it’s about practicality, comfort, and adding long-term value.
Renovating instead of relocating also helps avoid major costs such as:
- Stamp duty
- Real estate agent fees
- Legal and moving costs
That’s why demand for home renovation loans is rising — people want to improve what they already have without taking on the financial burden of buying again.
Renovation Lending Is on the Rise
Lending for home improvements has surged in recent years, with far more homeowners using home renovation loans to fund larger upgrades rather than relying solely on savings.
While smaller cosmetic updates may be manageable with cash, bigger projects like structural changes, extensions, or major kitchen and bathroom renovations often require finance. Choosing the right type of home renovation loan can help protect your cash flow and reduce financial pressure during the build.
Option 1: Using Home Equity with a Renovation Loan
One of the most common ways people access home renovation loans is by using their home equity.
What is equity?
Equity is the difference between your home’s market value and the remaining balance on your mortgage. If your property has increased in value, you may be able to borrow against that growth.
How a loan top-up works
A loan top-up increases your existing mortgage to release funds for renovations. It’s often a straightforward way to access a home renovation loan at a lower interest rate than personal loans or credit cards.
Benefits include:
- Lower interest rates
- One loan to manage
- Potential tax advantages (seek professional advice)
However, increasing your mortgage is also a good opportunity to review whether refinancing might offer a better deal.
Option 2: Refinancing to Access Renovation Funds
Refinancing involves switching to a new home loan, either with your current lender or a new one. Many homeowners use refinancing to secure home renovation loans while also improving their overall loan structure.
Refinancing may allow you to:
- Access additional equity
- Reduce your interest rate
- Unlock better features like offset accounts
But refinancing can also involve fees, so it’s important to compare long-term savings with upfront costs before proceeding.
Thinking about upgrading your home in 2026? Before you commit to a renovation budget, talk to us about your home renovation loan options. We can help you understand your equity, borrowing power, and the most cost-effective way to fund your project.
Option 3: Construction Loans for Major Renovations
For large-scale projects like extensions or structural rebuilds, a construction-style home renovation loan may be more suitable.
Unlike standard loans, construction loans release funds in stages as your renovation progresses. This means you only pay interest on the money that has been used, which can ease pressure on your budget while work is underway.
Once construction is finished, the loan typically converts into a standard home loan with regular repayments.
These types of home renovation loans require detailed building contracts and lender approval at each stage, but they can provide a safer structure for big renovation projects.
Budgeting Before You Apply
Before applying for home renovation loans, having a realistic budget is essential. Renovation costs can quickly climb due to:
- Material price increases
- Design changes
- Labour shortages
- Unexpected structural problems
Always include a contingency buffer of at least 10–20% to cover surprises. Lenders also view well-planned budgets more favourably when assessing renovation loan applications.
How Renovations Can Add Long-Term Value
Used wisely, home renovation loans can help turn your property into a more valuable and enjoyable place to live.
Renovations that often deliver strong returns include:
- Kitchen upgrades
- Bathroom remodels
- Adding bedrooms
- Improving energy efficiency
- Enhancing indoor-outdoor living areas
Balancing lifestyle upgrades with resale appeal ensures your renovation loan works as an investment, not just an expense.
Ready to bring your renovation plans to life? Let’s find the right home renovation loan to suit your budget and goals.
Contact us today to explore your options and start your 2026 renovation with confidence.
A well-planned finance strategy can save you thousands and help your renovation run smoothly from start to finish.
Phone: 1300 855 022
Email: clientservices@zippyfinancial.com.au
Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.
About the Author:
Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.
Connect with Louisa on Linkedin.
Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.