Home improvement loans for the projects that can't wait

Some home projects are dreams that can wait. Others can’t: the hot water system that gave up, the leaking roof, the bathroom that’s become a mould problem. And some sit in between, like the kitchen that’s driven you mad for years. A personal loan can fund all of them. The trick is to make the loan fit the project, not the other way round.

When does a personal loan make sense for home improvements?

A personal loan suits a renovation when:

• the cost is known, because you have written quotes;
• you want a clear end date, rather than adding years to a home loan;
• you don’t want to touch your mortgage, or you rent and can only make approved changes; and
• the repayment fits your budget with room to spare.

It’s less suited to open-ended projects where the scope keeps growing, because you’ll either run short or borrow more than you need.

How should you size the loan?

Start with written quotes, not estimates. Then add a modest contingency for the variations that almost every job throws up: a rotten joist behind the wall, extra electrical work, a fixture that’s back-ordered.

Item	Example approach
Builder or trade quotes	Written, itemised, with inclusions and exclusions listed
Materials you’re buying yourself	Priced from the supplier
Council or certification costs	Check with your council if approvals are needed
Contingency	A sensible buffer for variations
What you can pay from savings	Subtract it from the total before borrowing

Moneysmart’s general advice for personal loans applies: compare loans before you shop for the item, and choose the shortest term you can comfortably afford, because longer terms lower repayments but raise the total cost.

Put your income and expenses into the car budget planner with the car fields at zero to see a comfortable repayment. If the project’s loan fits, you can see your options before committing.

Personal loan or home loan redraw: which costs less?

On paper, borrowing against a mortgage can look cheaper. But the comparison that matters is the total cost. Adding a renovation to a home loan you’ll be paying for decades can mean paying interest on the kitchen long after it’s dated. A personal loan has a defined end, often within a few years.

Questions to ask:

• What’s the total amount payable on each option, including fees?
• How long would I realistically take to repay each?
• Would I pay the renovation portion off early if it sits in my home loan?
• Does using my home as security for this feel right?

Moneysmart’s refinancing guidance makes the same point about longer terms: lower repayments can come with a higher overall price.

Secured or unsecured: does it matter here?

Many home improvement loans are unsecured personal loans. They usually cost more than secured loans, but nothing is at risk of repossession if things go wrong; the lender would instead pursue the debt. A secured personal loan, using an asset such as a car, may cost less but puts that asset on the line. See secured vs unsecured personal loans for a full comparison.

How do you keep the project on budget?

• Pay in stages for work completed, never large amounts upfront.
• Get variations in writing, with the price agreed before the work is done.
• Keep every invoice and receipt together with your loan documents.
• Check your tradie’s licence and insurance with your state’s licensing body before the job starts.
• Don’t let the loan grow to cover upgrades you’d decided against.

What about urgent repairs on a tight budget?

If the job is an essential repair and money is very tight, check whether you qualify for a No Interest Loan, which can cover some essential household items, before taking on a personal loan. Our emergency personal loans page lists the cheaper options to try first. And if credit card debt from earlier projects is part of the picture, compare debt consolidation too.

Which projects tend to blow out, and how do you plan for them?

Some jobs are more predictable than others. A like-for-like hot water system or a new set of blinds rarely surprises anyone. Projects that open up walls, floors or roofs are a different story.

Project type	Why costs can grow	How to plan
Bathrooms and kitchens	Hidden water damage, plumbing and electrical upgrades	Ask the trade what’s commonly found once walls come off, and include a buffer
Decks and outdoor areas	Ground conditions, footings, council requirements	Check approvals early with your council
Older homes	Out-of-date wiring, asbestos, uneven floors	Get an inspection before quoting
Solar, batteries, heating and cooling	Switchboard upgrades, extra cabling	Ask the installer to include site-specific extras in the quote

If a variation would push the project past what your loan and savings can cover, pause and re-plan rather than adding a second loan on the run. Topping up with a credit card is usually the most expensive way to finish a job.

Ready to get the project started?

With quotes in hand and a repayment you know you can carry, the loan is the simple part. Start an application with our secure partner and see your options before you commit. A real person can help if you’re unsure how much contingency to include. Please answer accurately about your income, expenses and the purpose of the loan, so the options you see fit both the project and your budget.

See my home improvement loan options →