Renovating Using Equity: How Refinancing Can Unlock the Funds You Need

A well-planned renovation can add serious value to your home—not just in lifestyle terms, but also from a financial standpoint. Whether you’re thinking about upgrading the kitchen, extending the living area, or finally building that dream outdoor entertaining space, it all comes down to one thing: funding.

Many homeowners don’t realise that they may already be sitting on the money they need—hidden in the value of their property. Refinancing to access equity is a smart, often overlooked strategy that can turn renovation plans into reality without maxing out your savings.

Here’s how it works, what to consider, and how to know if it’s the right move for your situation.

What Is Equity—and How Do You Tap Into It?

Equity is the difference between your property’s current market value and the remaining balance on your home loan. If your home is worth $800,000 and you owe $500,000, you’ve got $300,000 in equity.

Lenders generally allow you to borrow up to 80% of your home’s value without needing to pay Lender’s Mortgage Insurance (LMI). In the example above, that means you could potentially access $140,000 in usable equity:

80% of $800,000 = $640,000
$640,000 minus the existing $500,000 loan = $140,000

That’s a substantial renovation budget—and you don’t need to sell or save for years to access it.

Refinancing vs. Redrawing: What’s the Difference?

If you’ve been making extra repayments over time, you may have access to redraw funds. But if you want to borrow more than your current loan balance, that’s where refinancing comes in.

Refinancing involves switching your home loan—either with your current lender or a new one—to increase the loan amount and release equity. You can then use those funds to finance your renovation project.

It’s a good opportunity to review your loan terms too—often, you can secure a better rate or more flexible features in the process.

How Renovations Can Increase Property Value

One of the main appeals of renovating with equity is the potential to boost the value of your home. Smart upgrades—think kitchen and bathroom remodels, adding a second living area, or improving outdoor flow—can provide strong returns when done well.

If the renovation increases your property’s value, it can also increase your equity. That means more leverage if you want to invest again later, refinance again, or sell at a profit.

That said, not all renovations deliver the same return. Cosmetic tweaks or over-capitalising in the wrong suburb may not add as much value as you’d hoped. This is where speaking to a local property expert or valuer can help guide your choices.

When Does Refinancing for Renovation Make Sense?

Refinancing to fund a renovation can be a smart move if:

You have significant usable equity in your home
Your current home loan rate is outdated or uncompetitive
You’re looking to stay in the property long-term
You’ve got a clear renovation plan and realistic budget
The planned upgrades will likely increase the home’s value

It may not be suitable if you’re planning to sell in the short term, your borrowing power is tight, or you’re already close to your maximum lending threshold.

Working with the best mortgage broker in Brisbane can help you assess these factors and determine whether refinancing is a sound move. A broker can compare multiple lenders, forecast repayments, and factor in potential changes to your financial situation.

Costs and Considerations Before You Refinance

Refinancing isn’t free—there are a few costs to factor in:

Loan application or establishment fees
Valuation fees
Discharge fees from your existing lender
Government charges (varies by state)
Possible break costs if you’re exiting a fixed loan early

Make sure you weigh the costs of refinancing against the benefits you’ll gain, both from your new loan and the renovation itself. In many cases, the renovation uplift far outweighs the switching costs—but it’s still worth doing the maths.

Be Strategic With the Funds You Unlock

Once you refinance and access your equity, it’s tempting to stretch the budget or use the funds for things beyond the renovation. Stay focused. Use the funds for works that add value, improve livability, or solve functional problems in the home.

Stick to your original plan, and if possible, keep a portion of the equity aside as a buffer. Renovations often run over budget, and having a contingency can save you stress (and avoid another refinance).

The Renovation–Refinance Cycle

Some homeowners go one step further: they renovate to increase the home’s value, then refinance again based on the new valuation to release more equity—either for further renovations or to invest elsewhere.

This strategy can work, but only if each renovation is adding meaningful value. It’s important to avoid the trap of turning your home into a constant project and losing sight of long-term affordability.

Final Thoughts: Make Equity Work for You, Not Against You

Refinancing to renovate can be a powerful financial move—but only when it’s done with clear strategy and discipline. If you’ve built equity in your home and want to upgrade your space without dipping into savings or taking out expensive personal loans, refinancing might be the key.

Before making the leap, get advice from professionals who understand both lending and property. A good broker can help with the loan side, while a builder, valuer, or real estate agent can guide you on renovation ROI. When those pieces come together, you’re not just improving your home—you’re growing your future wealth too.

Renovating Using Equity: How Refinancing Can Unlock the Funds You Need

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