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Invest in home life harmony

Plans for your property? Upgrade your home sooner with a low-rate renovation loan from Secure Broker

Invest in home life harmony

Plans for your property? Upgrade your home sooner with a low-rate
renovation loan from Secure Broker

Invest in home life harmony

Plans for your property? Upgrade your home sooner with a low-rate
renovation loan from Secure Broker

Renovation loans, explained

From a construction loan for home renovation to a repair bill for a leaky roof, it’s what you need it to be.

A home renovation loan is a type of personal loan that gives you the money you need to make the changes you want to your home. Whether you’re planning your dream upgrade and looking at a construction loan for home renovation, need to build an extension for a growing family or just have a few repairs to make, the choice is yours.

A loan built for you
A renovation loan is separate to your mortgage and is not about refinancing or tapping into your equity. It’s stand-alone finance to help you on your journey to home happiness.

But just like any other personal loan, renovation loans come in a few different shapes and sizes. Here are the two main ways to tell them apart.

Secured or unsecured?
If you’re willing to put up an asset as security against the loan, you can often access a better rate with a secured loan. Just remember, if you can’t repay the debt, your lender has the right to repossess the asset.

Fixed or variable?
For complete control over your money, you can choose to lock in your interest rate by fixing your loan. Budgeting is a breeze because you can work out the total cost of your loan, down to the cent. Rates will usually be a bit higher than with a variable, but you’ll avoid the ups and downs of the market.

How much can I borrow?
You can borrow between $2,000 and $50,000 or more across a range of loan terms, from 1 to 7 years. The loan is paid back in regular instalments (weekly, fortnightly or monthly) with interest, which may be fixed or variable across the life of the loan

Home loan vs. renovation loan: here’s why the difference matters.

If you’re interested in a renovation loan, chances are you already have a home loan. So can’t you just use that for renovating? You can, but a home loan and renovation loan aren’t quite the same. Let’s look at how they work so, when comparing home loan and renovation loan options, you understand the choices to make.

Home help
A home loan is, unsurprisingly, a loan to buy a home. In return for the money, you give your lender security over the property you are using the loan to buy. Home loans will typically be on a 25 to 30-year term, with regular fortnightly or monthly repayments.

If you have enough equity built up in your home, you can refinance your home loan – essentially borrowing more money against the increased value of your home. This can include borrowing money to fund a renovation. Doing this will increase the amount of your total loan that needs to be repaid. This gives you longer to repay the additional finance as it will be spread across the life of the loan, but it will likely cost you more in loan repayments.

What to look for in a renovation loan
A renovation loan is a great choice if you don’t have enough equity in your property to borrow or have the ability to repay your loan quickly. The amount you can borrow is based on the estimated post-renovation value of your home.

If you’re wondering what renovations are eligible, you simply need to consider: will it improve your home value? Compared to extending a home loan, a renovation loan will likely save you money, because it can be paid off completely within a shorter amount of time.

Renovation loans, just like any other personal loan, have the same building blocks. Understanding those pieces will help you choose the right loan for you.

Interest rate
When you borrow money from a lender, you agree to pay it back with interest. The percentage of interest that you’ll pay on top of the amount you borrow is called the Annual Percentage Rate (APR) or Advertised Rate. It’s usually an annual rate. To work out your rate, lenders will factor in things like your credit history, your repayment schedule, the risk of lending to you (both personally and looking at the market) and their underlying costs.

The lowest rate lenders have available is the headline advertised rate. But it’s usually only available to a small proportion of borrowers. It may come with set conditions to qualify (e.g. a high credit rating) so you might not be offered this rate.

What you’ll likely need is a personalised rate. Talk to a number of providers and see what they’re willing to offer you. Just check that their quote process is ‘credit score friendly’. You want to make sure they only conduct a soft check on your credit file, so it won’t impact your credit score.

And remember, it’s important to consider the total cost of the loan including interest, fees and other costs to properly assess the value of any interest rate on offer. Because the best loan for you might not actually come with the lowest interest rate.

Comparison rate
As well as interest, a renovation loan will usually come with fees and other charges. They can quickly add up, and suddenly the great rate you get isn’t worth it. A comparison rate factors in the interest rate and any fees expressed as an annual percentage. The comparison rate is usually higher than the interest rate charged on the loan and gives you a better idea of how much the loan will cost you.

It’s a pretty important number, which is why lenders and brokers must provide a comparison rate when they advertise a loan interest rate under the National Consumer Credit Protection Regulations.

How is it measured?
For renovation loans, there is a standardised measure for how comparison rates must be calculated and displayed. For variable and fixed-rate personal loans, the comparison rate is based on a $30,000 unsecured loan over 5 years.

But don’t get caught out – not all costs are included. You should remember you still need to factor in:

Late payment fees
Break costs or early termination fees
Deferred establishment fees
Broker fees (when taking out a loan through a broker, the broker’s service fees aren’t included in the comparison rate, which can be significant)
Repayments

When it comes time to pay back your loan, you’ll be making regularly scheduled repayments, either weekly, fortnightly or monthly. When you factor these repayments into your budget, check that your loan repayment calculations have been quoted inclusive of any ongoing fees.

Your lenders might also give you the option of making a lump sum repayment at the end of the loan term, called a balloon payment. It’s a handy way to manage your cash flow, because it reduces your regular repayments. But you’ll be paying interest on a higher loan balance as you go. However, the lump sum is still due at the end of the loan, so you’ll need to remember to find the money along the way.

Upfront fees
When you apply for a loan, you’ll face a few one-time charges to establish the loan. Known as establishment or application fees, they can include:

  • A flat fee (e.g. $499) that applies regardless of the value of the loan
  • A tiered fee (e.g. $250, $500, $750) based on the value of the loan
  • A percentage fee (e.g. 3%) based on the total amount borrowed and the credit or risk profile of the customer
  • A hybrid fee (e.g. $200 + 2% of the loan amount)

It’s up to your lender if they charge any or all of these

But even though they’re called ‘up front’ fees, that’s only when you’re charged them, not when you pay them. They’re usually capitalised to the loan, meaning they’re added to your loan, increasing your total loan amount.

That means you’ll be paying interest on those fees (as part of your total loan) for the life of your loan. If it’s a small upfront fee, the difference might be only a few dollars on each repayment. But if they’re significant, they can be costly.

Monthly or ongoing fees
Ongoing, account keeping or loan management fees, are typically paid monthly across the life of a loan. They just go straight to the lender and don’t help you pay down your loan at all. Typically, the lower the fees, the better. But it’s still important to look at the total amount you repay when you factor in all interest payable and costs.

Brokerage fees
Brokers can be helpful, but you’ll still need to pay them for their service, whether or not you realise it. For personal loans, the brokerage fee is often capitalised to the loan amount and is additional to the lender’s own upfront fee. Brokers can also have commission arrangements with lenders built into your interest rate or offered as a return based on the final rate you accept. It’s another cost you should remember.

Penalty fees
Penalty fees are avoidable, but they’re still a reality. The most common penalty fee is the ‘default’ or missed payment fee. If you make a payment late, or there are insufficient funds in your nominated account on the day a payment is due, you’ll likely be hit with a fee.

Late fees vary from $10 to as much as $35. Your lender may waive the fee if your account is brought up to date within 3 days of a missed payment, but you shouldn’t count on it. Be sure to keep an eye on your spending and make sure you have enough in your account to pay the loan. You might even like to set up a separate account dedicated to paying your loan.

Early repayment fees
Paying back your loan early is a great way to save money, just make sure you don’t get charged a hefty early repayment fee that undoes all your good work.

  • Exit fees or early repayment fees are more common with secured low-rate loans. There are different types:
  • A fixed fee where the loan is repaid in full any time prior to the end of the loan term (e.g. $500)
  • A fixed fee where the loan is repaid in full prior to a minimum period (e.g. $250 if full repayment is made less than 2 years into a 5-year loan)A variable fee based on the amount you would have paid in interest and fees had the loan run to full term

    Loan amount
    How much money do you need for your renovation? Yep, that’s your loan amount (plus those upfront fees). This is the principal part of your loan that you’ll be repaying. Interest is charged on top of this, based on the outstanding balance of your loan.

In Australia, renovation loans usually range from $2,000 to $50,000, but some lenders will go higher.

Loan term
A renovation loan gives you a dedicated window to pay back what you borrowed. In Australia, lenders offer loan terms between 1 and 7 years, with 3, 5 and 7 year terms being the most common.

Your monthly repayments will be lower if you take longer to pay. Just remember, to do your sums because a longer-term loan might have a higher interest rate that will cost you more overall.

Customer experience
A variable fee based on the amount you would have paid in interest and fees had the loan run to full term

Finding a lender that cares is the glue that sticks it all together. Look for a lender who makes it quick and easy to apply, get approved and manage your loan. They should care about your experience. If you know they care, you can more easily trust that you’re getting a great deal.

What can I use my renovation loan for?
For a kitchen renovation fit for a master chef or simply to fit more friends at the table – it’s your choice.

Looking to add value to your property, expand your living space, improve your home’s energy efficiency, or simply to make it a more comfortable place to live? You can do it all and more with a renovation loan. That dream kitchen renovation? Done. That extra room downstairs? Move right in. If you can dream it, you can build it. A home renovation loan can help you pay for it.

For home, sweet home
Turn those home dreams into home pride. A renovation loan can be used for:

Kitchen renovations – A renovation loan can be used for any kind of kitchen renovation or remodel, including cosmetic renovations such as installing new appliances and furniture. Add more cabinets, remodel to suit your lifestyle or install new splash backs that pop, it’s for everything including the kitchen sink

Bathroom renovations – A renovation loan can take your bathroom from “oh dear” to “oh my.” Update an old bathroom from top to bottom – upgrade taps and plumbing, install a new shower or bath and replace those outdated tiles with your designer choice. You can also add a second toilet or bathroom

Bedroom renovations – A renovation loan is perfect when a bedroom needs a quick lift. Bedroom renovations can include new paint and cabinetry, new beds, curtains as well as updated flooring such as carpet, floorboards or tiling
Living area renovations – A renovation loan can help you gain that much-needed space, extending your living area for more comfortable family gatherings

Backyard renovations – Renovation loans aren’t just for the inside. You can also use them to pay for outdoor improvements that make life outside more enjoyable, like a new garden, those long overdue pavers, a retaining wall, a deck or a pool

For adding value — It’s not all about what you get now, a renovation loan can also help you plan for the future. Renovation loans can be used to fund any value-adding renovations. These types of renovations include adding an addition to your house which can boost your property’s overall value and comfort.

For going green
A renovation loan can be used to not just improve your life but improve the planet. Cover the costs of green or energy-efficient additions to improve your home’s sustainability, such as solar panels and insulation. And you might just end up helping your hip pocket.

For feeling secure

Take care of everything that’s precious to you and use a renovation loan to make your home more secure. You can use it for security screens, a garage or secured parking.

Just as everyone’s home is different, there is no one size fits all when it comes to loans for home improvements. While not quite as much fun as poring over floor plans, you do need to do your homework to find the one best suited to your needs.

So how can you decide which loan is right for you? You will first need to make a few key decisions. Planning and considering your situation upfront will help when comparing what loan product is going to be the right match, and offer you the best value.

1. Loan Amount: How much do you really need?
To decide how much you need to borrow, do some research and budgeting to work out how much (approximately) you are going to need for your renovation plan. It’s so easy to get carried away, but it’s smart to only borrow what you really need, even if more than that is offered to you by a lender.

Remember, when you borrow money to pay for something, the actual final ‘cost’ of that item becomes much higher when you factor in the cost of the loan. For example, if you borrow $20,000 to improve your bathroom with a 5 year Unsecured Loan and at a fixed interest rate of 12.50%, that bathroom may actually cost you around $27,417.

2. Repayments: How much can you afford to repay?
Look at your everyday budget, or create one, to see how much you can realistically afford to put towards loan repayments. It’s always good to give yourself a buffer; failure to make a repayment at any time can cost you a lot in fees.

Of course, it isn’t good for your credit rating either. Are you expecting any major expenses or changes in income in the next few years, changing where or how much you work, or perhaps hoping to have a baby? Be sure to build this in.

Whether you receive your income weekly, fortnightly or monthly, you need to know how much you have left over at the end of each pay period and how this will align with your repayments. This is to ensure there are no missed payment surprises. It may be worth opening a separate bank account for your repayments and transferring these funds in on payday so you are never caught out.

3. Loan Term: How long will you need to repay?
Divide the total amount of your ideal car loan amount by your planned monthly repayment to get a ballpark amount of time you’ll need to repay the loan. For example, Sarah and David wanted to borrow $24,000 to pay for a new kitchen. Based on their salary and existing expenses, he thought $120 per week / $480 per month would be an affordable repayment. This would be $5,760 per year, meaning in 5 years they’d have paid $28,800— roughly the full amount, accounting for interest and charges.

A longer-term loan might seem attractive as it means lower monthly repayments, however the overall (lifetime) cost of the loan is significantly higher because you’ll pay more in interest and potential fees. That being said, provided you look for a loan with flexible repayments you’ll be able to take advantage of any future increases in salary that may allow you to pay down your loan faster without penalty.

4. Loan Type: Decide between a secured or unsecured loan
Given you already have a valuable asset — the property that you are improving — it can be very cost-effective to offer your property as security on your loan. If you are confident in your ability to repay the loan, a secured loan will get you a better rate and may also unlock access to greater funds. It’s important to be aware that your asset will be at risk if you can’t make the repayments.

5. Compare: Start to request and examine your personalised offers
Now you know roughly how much you need to borrow, what you can afford as a repayment, and how long you’ll need to repay your loan. Next, you can start to plug these values directly into lender or comparison sites to get an estimate of your personalised interest rate and repayments.

Experiment with different combinations, such as different loan terms or repayment amounts, and match them against your needs. Need more help deciding? There are many third-party agencies (which don’t sell loans) that both rate and compare a broad range of loans.

Canstar is one of the most established financial comparison sites. They’ve been comparing products without bias since 1992. They release annual star-ratings for a range of personal loans from many providers. To do this, Canstar comprehensively and rigorously examines a broad range of loans available across Australia. To come up with an overall score, they award points for:

  • Price — comparative pricing factoring in interest and fees
  • Features — like the complexity of the application, the time involved before settlement, product management, customer service and loan closure

These are then aggregated and weighted to produce a total score. This means Canstar’s ratings are reputable and transparent, so you can trust the information they provide but still dig deeper if you want to.

Other comparison sites can also be useful, however, you should always check around, as some may have a ‘sales’ element — that is, they may receive money for the people that visit their website en route to a particular lender. So if the best rate isn’t being offered, it may not show up on their comparison. They also have ‘promoted’ or ‘featured’ loans, which they are paid to highlight, even if those loans do not truly reflect the best value car loans on the market. 

Another way to get information on your lender and loan is to read feedback from real, verified customers’ on ProductReview.com.au.

What questions should I ask when choosing a loan? Here’s a useful checklist to be confident you understand your loan:

  • What are the interest rate and the comparison rate?
  • How do these rates compare to other types of loans?
  • What are the fees and charges? (e.g. upfront, ongoing, early exit)
  • What are the terms and conditions?
  • Do the loan term and loan amount fit your needs?
  • Can you afford the repayments?
  • Are you comfortable with the lender? Have you checked its reputation and accreditation?

Comparison rates are a good starting point, but you still need to decide what will work best for you. The costs involved are a major factor, but once you have shortlisted a few loans with similar costs, make time for these final checks:

  • Are there flexible repayment options? Usually, you can choose between weekly, fortnightly or monthly repayments according to what suits your pay cycle. However, not all lenders offer this. It may matter to you, it may not
  • Compare a loan’s conditions and fees around making extra repayments and paying the loan off before the end of the term. This can be a great way to reduce the overall cost of your car loan, but not if you’ll incur extra penalties
  • Can you use the funds for the renovation you have planned? Or are your plans still coming together making that a difficult question. You can’t always use the borrowed money for whatever you like.

    For example, when extending a mortgage, you may only be able to spend the loan funds on improvements that meet the lender’s criteria. Other types of loans can be more flexible. Do make sure your purchase plans match the lender’s policies

  • What are the options for managing the loan over time? Check and compare how easy the loan will be to manage with regard to repayments, your personal details, any refinancing down the track. The option to manage your account online is often available, but not always, and some lenders have more functionality than others. Using direct debit for repayments is common, yet without it, monthly repayments will be much less convenient and you are more likely to be penalised for late payments if you aren’t perfectly disciplined

With this homework under your belt, you’re well on the way to being able to compare a range of loans out there, so you can feel confident you’re choosing the right one for you.

 



Renovation loans, explained

From a construction loan for home renovation to a repair bill for a leaky roof, it’s what you need it to be.

A home renovation loan is a type of personal loan that gives you the money you need to make the changes you want to your home. Whether you’re planning your dream upgrade and looking at a construction loan for home renovation, need to build an extension for a growing family or just have a few repairs to make, the choice is yours.

A loan built for you
A renovation loan is separate to your mortgage and is not about refinancing or tapping into your equity. It’s stand-alone finance to help you on your journey to home happiness.

But just like any other personal loan, renovation loans come in a few different shapes and sizes. Here are the two main ways to tell them apart.

Secured or unsecured?
If you’re willing to put up an asset as security against the loan, you can often access a better rate with a secured loan. Just remember, if you can’t repay the debt, your lender has the right to repossess the asset.

Fixed or variable?
For complete control over your money, you can choose to lock in your interest rate by fixing your loan. Budgeting is a breeze because you can work out the total cost of your loan, down to the cent. Rates will usually be a bit higher than with a variable, but you’ll avoid the ups and downs of the market.

How much can I borrow?
You can borrow between $2,000 and $50,000 or more across a range of loan terms, from 1 to 7 years. The loan is paid back in regular instalments (weekly, fortnightly or monthly) with interest, which may be fixed or variable across the life of the loan

Home loan vs. renovation loan: here’s why the difference matters.

If you’re interested in a renovation loan, chances are you already have a home loan. So can’t you just use that for renovating? You can, but a home loan and renovation loan aren’t quite the same. Let’s look at how they work so, when comparing home loan and renovation loan options, you understand the choices to make.

Home help
A home loan is, unsurprisingly, a loan to buy a home. In return for the money, you give your lender security over the property you are using the loan to buy. Home loans will typically be on a 25 to 30-year term, with regular fortnightly or monthly repayments.

If you have enough equity built up in your home, you can refinance your home loan – essentially borrowing more money against the increased value of your home. This can include borrowing money to fund a renovation. Doing this will increase the amount of your total loan that needs to be repaid. This gives you longer to repay the additional finance as it will be spread across the life of the loan, but it will likely cost you more in loan repayments.

What to look for in a renovation loan
A renovation loan is a great choice if you don’t have enough equity in your property to borrow or have the ability to repay your loan quickly. The amount you can borrow is based on the estimated post-renovation value of your home.

If you’re wondering what renovations are eligible, you simply need to consider: will it improve your home value? Compared to extending a home loan, a renovation loan will likely save you money, because it can be paid off completely within a shorter amount of time.

Renovation loans, just like any other personal loan, have the same building blocks. Understanding those pieces will help you choose the right loan for you.

Interest rate
When you borrow money from a lender, you agree to pay it back with interest. The percentage of interest that you’ll pay on top of the amount you borrow is called the Annual Percentage Rate (APR) or Advertised Rate. It’s usually an annual rate. To work out your rate, lenders will factor in things like your credit history, your repayment schedule, the risk of lending to you (both personally and looking at the market) and their underlying costs.

The lowest rate lenders have available is the headline advertised rate. But it’s usually only available to a small proportion of borrowers. It may come with set conditions to qualify (e.g. a high credit rating) so you might not be offered this rate.

What you’ll likely need is a personalised rate. Talk to a number of providers and see what they’re willing to offer you. Just check that their quote process is ‘credit score friendly’. You want to make sure they only conduct a soft check on your credit file, so it won’t impact your credit score.

And remember, it’s important to consider the total cost of the loan including interest, fees and other costs to properly assess the value of any interest rate on offer. Because the best loan for you might not actually come with the lowest interest rate.

Comparison rate
As well as interest, a renovation loan will usually come with fees and other charges. They can quickly add up, and suddenly the great rate you get isn’t worth it. A comparison rate factors in the interest rate and any fees expressed as an annual percentage. The comparison rate is usually higher than the interest rate charged on the loan and gives you a better idea of how much the loan will cost you.

It’s a pretty important number, which is why lenders and brokers must provide a comparison rate when they advertise a loan interest rate under the National Consumer Credit Protection Regulations.

How is it measured?
For renovation loans, there is a standardised measure for how comparison rates must be calculated and displayed. For variable and fixed-rate personal loans, the comparison rate is based on a $30,000 unsecured loan over 5 years.

But don’t get caught out – not all costs are included. You should remember you still need to factor in:

Late payment fees
Break costs or early termination fees
Deferred establishment fees
Broker fees (when taking out a loan through a broker, the broker’s service fees aren’t included in the comparison rate, which can be significant)
Repayments

When it comes time to pay back your loan, you’ll be making regularly scheduled repayments, either weekly, fortnightly or monthly. When you factor these repayments into your budget, check that your loan repayment calculations have been quoted inclusive of any ongoing fees.

Your lenders might also give you the option of making a lump sum repayment at the end of the loan term, called a balloon payment. It’s a handy way to manage your cash flow, because it reduces your regular repayments. But you’ll be paying interest on a higher loan balance as you go. However, the lump sum is still due at the end of the loan, so you’ll need to remember to find the money along the way.

Upfront fees
When you apply for a loan, you’ll face a few one-time charges to establish the loan. Known as establishment or application fees, they can include:

  • A flat fee (e.g. $499) that applies regardless of the value of the loan
  • A tiered fee (e.g. $250, $500, $750) based on the value of the loan
  • A percentage fee (e.g. 3%) based on the total amount borrowed and the credit or risk profile of the customer
  • A hybrid fee (e.g. $200 + 2% of the loan amount)

It’s up to your lender if they charge any or all of these

But even though they’re called ‘up front’ fees, that’s only when you’re charged them, not when you pay them. They’re usually capitalised to the loan, meaning they’re added to your loan, increasing your total loan amount.

That means you’ll be paying interest on those fees (as part of your total loan) for the life of your loan. If it’s a small upfront fee, the difference might be only a few dollars on each repayment. But if they’re significant, they can be costly.

Monthly or ongoing fees
Ongoing, account keeping or loan management fees, are typically paid monthly across the life of a loan. They just go straight to the lender and don’t help you pay down your loan at all. Typically, the lower the fees, the better. But it’s still important to look at the total amount you repay when you factor in all interest payable and costs.

Brokerage fees
Brokers can be helpful, but you’ll still need to pay them for their service, whether or not you realise it. For personal loans, the brokerage fee is often capitalised to the loan amount and is additional to the lender’s own upfront fee. Brokers can also have commission arrangements with lenders built into your interest rate or offered as a return based on the final rate you accept. It’s another cost you should remember.

Penalty fees
Penalty fees are avoidable, but they’re still a reality. The most common penalty fee is the ‘default’ or missed payment fee. If you make a payment late, or there are insufficient funds in your nominated account on the day a payment is due, you’ll likely be hit with a fee.

Late fees vary from $10 to as much as $35. Your lender may waive the fee if your account is brought up to date within 3 days of a missed payment, but you shouldn’t count on it. Be sure to keep an eye on your spending and make sure you have enough in your account to pay the loan. You might even like to set up a separate account dedicated to paying your loan.

Early repayment fees
Paying back your loan early is a great way to save money, just make sure you don’t get charged a hefty early repayment fee that undoes all your good work.

  • Exit fees or early repayment fees are more common with secured low-rate loans. There are different types:
  • A fixed fee where the loan is repaid in full any time prior to the end of the loan term (e.g. $500)
  • A fixed fee where the loan is repaid in full prior to a minimum period (e.g. $250 if full repayment is made less than 2 years into a 5-year loan)A variable fee based on the amount you would have paid in interest and fees had the loan run to full term

    Loan amount
    How much money do you need for your renovation? Yep, that’s your loan amount (plus those upfront fees). This is the principal part of your loan that you’ll be repaying. Interest is charged on top of this, based on the outstanding balance of your loan.

In Australia, renovation loans usually range from $2,000 to $50,000, but some lenders will go higher.

Loan term
A renovation loan gives you a dedicated window to pay back what you borrowed. In Australia, lenders offer loan terms between 1 and 7 years, with 3, 5 and 7 year terms being the most common.

Your monthly repayments will be lower if you take longer to pay. Just remember, to do your sums because a longer-term loan might have a higher interest rate that will cost you more overall.

Customer experience
A variable fee based on the amount you would have paid in interest and fees had the loan run to full term

Finding a lender that cares is the glue that sticks it all together. Look for a lender who makes it quick and easy to apply, get approved and manage your loan. They should care about your experience. If you know they care, you can more easily trust that you’re getting a great deal.

What can I use my renovation loan for?
For a kitchen renovation fit for a master chef or simply to fit more friends at the table – it’s your choice.

Looking to add value to your property, expand your living space, improve your home’s energy efficiency, or simply to make it a more comfortable place to live? You can do it all and more with a renovation loan. That dream kitchen renovation? Done. That extra room downstairs? Move right in. If you can dream it, you can build it. A home renovation loan can help you pay for it.

For home, sweet home
Turn those home dreams into home pride. A renovation loan can be used for:

Kitchen renovations – A renovation loan can be used for any kind of kitchen renovation or remodel, including cosmetic renovations such as installing new appliances and furniture. Add more cabinets, remodel to suit your lifestyle or install new splash backs that pop, it’s for everything including the kitchen sink

Bathroom renovations – A renovation loan can take your bathroom from “oh dear” to “oh my.” Update an old bathroom from top to bottom – upgrade taps and plumbing, install a new shower or bath and replace those outdated tiles with your designer choice. You can also add a second toilet or bathroom

Bedroom renovations – A renovation loan is perfect when a bedroom needs a quick lift. Bedroom renovations can include new paint and cabinetry, new beds, curtains as well as updated flooring such as carpet, floorboards or tiling
Living area renovations – A renovation loan can help you gain that much-needed space, extending your living area for more comfortable family gatherings

Backyard renovations – Renovation loans aren’t just for the inside. You can also use them to pay for outdoor improvements that make life outside more enjoyable, like a new garden, those long overdue pavers, a retaining wall, a deck or a pool

For adding value — It’s not all about what you get now, a renovation loan can also help you plan for the future. Renovation loans can be used to fund any value-adding renovations. These types of renovations include adding an addition to your house which can boost your property’s overall value and comfort.

For going green
A renovation loan can be used to not just improve your life but improve the planet. Cover the costs of green or energy-efficient additions to improve your home’s sustainability, such as solar panels and insulation. And you might just end up helping your hip pocket.

For feeling secure

Take care of everything that’s precious to you and use a renovation loan to make your home more secure. You can use it for security screens, a garage or secured parking.

Just as everyone’s home is different, there is no one size fits all when it comes to loans for home improvements. While not quite as much fun as poring over floor plans, you do need to do your homework to find the one best suited to your needs.

So how can you decide which loan is right for you? You will first need to make a few key decisions. Planning and considering your situation upfront will help when comparing what loan product is going to be the right match, and offer you the best value.

1. Loan Amount: How much do you really need?
To decide how much you need to borrow, do some research and budgeting to work out how much (approximately) you are going to need for your renovation plan. It’s so easy to get carried away, but it’s smart to only borrow what you really need, even if more than that is offered to you by a lender.

Remember, when you borrow money to pay for something, the actual final ‘cost’ of that item becomes much higher when you factor in the cost of the loan. For example, if you borrow $20,000 to improve your bathroom with a 5 year Unsecured Loan and at a fixed interest rate of 12.50%, that bathroom may actually cost you around $27,417.

2. Repayments: How much can you afford to repay?
Look at your everyday budget, or create one, to see how much you can realistically afford to put towards loan repayments. It’s always good to give yourself a buffer; failure to make a repayment at any time can cost you a lot in fees.

Of course, it isn’t good for your credit rating either. Are you expecting any major expenses or changes in income in the next few years, changing where or how much you work, or perhaps hoping to have a baby? Be sure to build this in.

Whether you receive your income weekly, fortnightly or monthly, you need to know how much you have left over at the end of each pay period and how this will align with your repayments. This is to ensure there are no missed payment surprises. It may be worth opening a separate bank account for your repayments and transferring these funds in on payday so you are never caught out.

3. Loan Term: How long will you need to repay?
Divide the total amount of your ideal car loan amount by your planned monthly repayment to get a ballpark amount of time you’ll need to repay the loan. For example, Sarah and David wanted to borrow $24,000 to pay for a new kitchen. Based on their salary and existing expenses, he thought $120 per week / $480 per month would be an affordable repayment. This would be $5,760 per year, meaning in 5 years they’d have paid $28,800— roughly the full amount, accounting for interest and charges.

A longer-term loan might seem attractive as it means lower monthly repayments, however the overall (lifetime) cost of the loan is significantly higher because you’ll pay more in interest and potential fees. That being said, provided you look for a loan with flexible repayments you’ll be able to take advantage of any future increases in salary that may allow you to pay down your loan faster without penalty.

4. Loan Type: Decide between a secured or unsecured loan
Given you already have a valuable asset — the property that you are improving — it can be very cost-effective to offer your property as security on your loan. If you are confident in your ability to repay the loan, a secured loan will get you a better rate and may also unlock access to greater funds. It’s important to be aware that your asset will be at risk if you can’t make the repayments.

5. Compare: Start to request and examine your personalised offers
Now you know roughly how much you need to borrow, what you can afford as a repayment, and how long you’ll need to repay your loan. Next, you can start to plug these values directly into lender or comparison sites to get an estimate of your personalised interest rate and repayments.

Experiment with different combinations, such as different loan terms or repayment amounts, and match them against your needs. Need more help deciding? There are many third-party agencies (which don’t sell loans) that both rate and compare a broad range of loans.

Canstar is one of the most established financial comparison sites. They’ve been comparing products without bias since 1992. They release annual star-ratings for a range of personal loans from many providers. To do this, Canstar comprehensively and rigorously examines a broad range of loans available across Australia. To come up with an overall score, they award points for:

  • Price — comparative pricing factoring in interest and fees
  • Features — like the complexity of the application, the time involved before settlement, product management, customer service and loan closure

These are then aggregated and weighted to produce a total score. This means Canstar’s ratings are reputable and transparent, so you can trust the information they provide but still dig deeper if you want to.

Other comparison sites can also be useful, however, you should always check around, as some may have a ‘sales’ element — that is, they may receive money for the people that visit their website en route to a particular lender. So if the best rate isn’t being offered, it may not show up on their comparison. They also have ‘promoted’ or ‘featured’ loans, which they are paid to highlight, even if those loans do not truly reflect the best value car loans on the market. 

Another way to get information on your lender and loan is to read feedback from real, verified customers’ on ProductReview.com.au.

What questions should I ask when choosing a loan? Here’s a useful checklist to be confident you understand your loan:

  • What are the interest rate and the comparison rate?
  • How do these rates compare to other types of loans?
  • What are the fees and charges? (e.g. upfront, ongoing, early exit)
  • What are the terms and conditions?
  • Do the loan term and loan amount fit your needs?
  • Can you afford the repayments?
  • Are you comfortable with the lender? Have you checked its reputation and accreditation?

Comparison rates are a good starting point, but you still need to decide what will work best for you. The costs involved are a major factor, but once you have shortlisted a few loans with similar costs, make time for these final checks:

  • Are there flexible repayment options? Usually, you can choose between weekly, fortnightly or monthly repayments according to what suits your pay cycle. However, not all lenders offer this. It may matter to you, it may not
  • Compare a loan’s conditions and fees around making extra repayments and paying the loan off before the end of the term. This can be a great way to reduce the overall cost of your car loan, but not if you’ll incur extra penalties
  • Can you use the funds for the renovation you have planned? Or are your plans still coming together making that a difficult question. You can’t always use the borrowed money for whatever you like.

    For example, when extending a mortgage, you may only be able to spend the loan funds on improvements that meet the lender’s criteria. Other types of loans can be more flexible. Do make sure your purchase plans match the lender’s policies

  • What are the options for managing the loan over time? Check and compare how easy the loan will be to manage with regard to repayments, your personal details, any refinancing down the track. The option to manage your account online is often available, but not always, and some lenders have more functionality than others. Using direct debit for repayments is common, yet without it, monthly repayments will be much less convenient and you are more likely to be penalised for late payments if you aren’t perfectly disciplined

With this homework under your belt, you’re well on the way to being able to compare a range of loans out there, so you can feel confident you’re choosing the right one for you.

 



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Plans for your property? Upgrade your home sooner with a low-rate renovation loan from Secure Broker

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Fast-track your home renovations with a home improvement loan from Secure Broker

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Renovation Loans

Plans for your property? Upgrade your home sooner with a low-rate renovation loan from Secure Broker

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An easy to understand medium to long-term business loan, ideal for growing your small business.

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Get an estimate of your personal loan repayments by adjusting the loan amount and term below.

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Fast-track your home renovations with a home improvement loan from Secure Broker

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motor running today with a low rate car loan.

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