Buying a fixer-upper? Or thinking about transforming the home you’re already in? A grand vision is great… but if you need financing to achieve the renovation, be aware that lenders want more than mood boards and inspiration pics.
In the Inner West, many homes have beautiful bones but need some love. Some buyers plan to renovate straight after moving in. Others weigh up whether to sell or reconfigure what they have. Either way, how you fund the project is critical.
There are two main ways to borrow for a renovation:
1. Using existing equity
If the work is minor (think: a kitchen update, new bathroom, fresh flooring), you may be able to release equity through a loan top-up or split. The bank lends you a lump sum based on your home’s current value, and you manage the project yourself.
2. Taking out a construction loan
If you’re planning structural work — adding a level, changing the floor plan — you’ll likely need a construction loan. These are funded in stages, with progress payments to your builder. They require council-approved plans, a fixed-price builder’s contract, and detailed quotes.
What lenders look at
Regardless of the type of loan, the bank will assess your borrowing capacity and your loan-to-value ratio (LVR). If your existing debt is already at 80% of the property’s value, you may need either an increase in value or higher income to qualify for more.
Avoiding common traps
Not every renovation adds value… and overcapitalising is a real risk. We help clients crunch the numbers before they start: total costs, added debt, interest during the build, potential rental income changes (for investment properties), and realistic value uplift once the dust settles.
The bottom line
Start with the numbers, then move to the design. A well-funded renovation can add value and improve your lifestyle — but only if you go in with clear eyes and a solid plan.
Most importantly, don’t try to move forward half-informed. Having professional guidance on your side makes all the difference in the final outcome.
Rebecca Morgan — My Mortgage Concierge
Rebecca helps Inner West families fund renovations wisely, without overextending or overcapitalising. From small updates to full-scale rebuilds, she makes sure the finance works before the plans are finalised.
Thinking about a renovation? Start with the right lending strategy.
📞 Call Rebecca on 02 8014 4443 or visit mymortgageconcierge.com.au
