If you are looking for funds to help you pay for home improvements – be it for a minor cosmetic change or an extensive makeover – you might be thinking about borrowing extra on mortgage for renovations. Our guide should help you decide whether it’s the right option for you.

Borrowing Extra on Mortgage: What Does It Mean?

Borrowing extra on mortgage for renovations means that when you remortgage, you borrow additional money and therefore increase the overall size of your mortgage. Then, you can use these extra funds to pay for home improvements.

Tips to Boost Your Mortgage Borrowing Power

If you’re thinking about borrowing extra on mortgage for renovations, here are some useful tips to help you qualify for a larger mortgage:

  1. Pay Off Debts or Consolidate Them

When assessing your mortgage applications, lenders will look at how much money you owe already. Generally, the more debt that you have, the less that you will be able to borrow. If you have savings, use them to pay off your existing debts. Not only will this be cost-effective, but it will make you more attractive to lenders.

Alternatively, you can consolidate your existing debts in to the home loan – credit cards, car loans, personal loans for example.  This will most likely reduce the amount of interest your are paying per month.

  1. Extend The Loan Term

Say, for example, your existing loan has 15 years remaining.  The bank may decline your application to get money out for renovations because they think you aren’t good for the money.  A simple way around this is to increase the loan term, this would reduce the monthly repayments and could be the difference between a green light or a red light.

In many instances you can get your money for renovations and keep the loan repayments the same as what they were before.

  1. Improve Your Credit Rating

A good credit score can help you land not only a lower interest rate but also a slightly larger loan. There are several ways to improve your credit record, including paying utility bills on time, paying off old debts, and lowering your credit utilisation rate among others.

Before you borrow extra on your mortgage, make sure that:

The Benefits of Borrowing Extra on Mortgage

Here are some of the benefits of borrowing extra on mortgage for renovations:

Often, you can take advantage of the low-interest mortgage rates available. So, the extra money that you borrow may not increase monthly payments. However, even if the new remortgage will cost slightly more every month, the additional equity you gain by increasing your home’s value can leave you in a better financial situation in the long run.

Let’s say you borrowed more than necessary for your home renovation. You can use those extra funds to pay off your other expenses, such as school fees, vacation expenses, or high-interest credit card balance.

The Bottom Line

Depending on the size of your home renovation project, you may need anything from a few thousand to hundreds of thousands of dollars.

Renovating is an excellent way to add value to your home. However, like most creative projects, home renovations can be stressful and frustrating this is where I can help you. With my expertise, I can help you make the right financial decisions so that you can fund the home renovation project that you have always dreamt about.


Will Bell Mortgage Broker is a mortgage and finance broker based in Melbourne specializing in residential home loans.  Will is all about the average Australian understanding just enough of the broader economy to take action on your own personal economy.  He is the host of the My Personal Economy Podcast which you can check out here.

Additionally, you can follow him on Facebook