Most homeowners have renovation ideas. Whether it’s a new kitchen, a bigger bathroom or a walk-in wardrobe, there’s usually something we want to change. When these ideas turn into a necessity (or an overwhelming ambition), it’s time to think about how you will finance your renovation project. Cash is always king, but if you aren’t lucky enough to have savings, you will need to find another way. The most common way (and the one that should be explored first) is refinancing. The good news is that refinancing a mortgage isn’t as challenging as you might think. In fact refinancing is an ideal opportunity to review your home loan and make sure it still the best option out there. Let’s find out more.
Renovation Loans: How They Work
Plenty of homeowners are guilty of taking a ‘set and forget’ approach when it comes to their home loans. Meanwhile, you may be paying a higher interest rate or unnecessary fees.Therefore, if you want to borrow extra for renovations, refinancing makes good financial sense. According to the Mortgage and Finance Association of Australia (MFAA), refinancing to renovate is the most common reason why borrowers refinance. Generally speaking , there are two ways to refinance
- Taking out a new loan with a new lender
- Extending your current loan
Refinancing with a new lender will usually incur fees but you may be able to get a lower interest rate to offset these. If you want to stay with our current lender, extending your existing home loan is a good option. The most important thing when it comes to refinancing, is making sure you understand the short and long-term consequences for your finances.
Refinancing Home Loan in Sydney
If you’re considering remortgaging to renovate, the best thing you can do is seek professional advice from your local Mortgage Broker. They will be able to assess your circumstances and research the long-term financial consequences of refinancing. They can also explain to you the many options available from a variety of lenders. For example, Atelier Wealth has access to over 400 products from over 20 lenders. So if you’re looking for a renovation loan in Sydney, it’s worth speaking to the finance brokers at Atelier.