So you’ve got big home renovation plans and are thinking a personal loan may be the best way to bring those dreams to life, but you’re not sure what you can actually spend loan funds on? We know finance can be a bit confusing, so let’s take a look at personal renovation loans and what you can spend those funds on.
A personal loan can be a great option for financing small home improvements. Whether you're looking to update your furniture or redo your kitchen, a personal loan can give you the freedom you need to get the job done. Most lenders will deposit the loan amount directly into your personal bank account, so you can use the loan for labour, materials and more.
Generally, the maximum loan amount for a personal loan is around $50,000 – so how do lenders like you to spend those loan funds?
Renovation-related costs: yes or no?
From painters and plumbers to bench tops and new in-built wardrobes, lenders are usually happy to say YES to you spending the borrowed funds on renovation-related costs. Just keep in mind when planning that while personal loans are capped at around $50,000, lenders might tailor your loan amount to your personal financial circumstances.
New furniture: yes or no?
Finished creating the perfect outdoor living space but need some new outdoor furniture to bring it all together? A personal renovation loan tends to give you the flexibility to say YES to new furniture or decor. However, it’s important to closely consider how much you’ll want to borrow so that you can avoid paying more interest and fees than necessary.
Exciting international holiday: yes or no?
Did your renovations cost less than you’d initially thought? Using your loan funds on something other than the specified loan purpose is a NO from lenders. If you’ve got leftover funds, you could consider extra repayments or even pay off your loan early as this can help reduce the amount of interest you pay. This is where choosing a lender that doesn't charge early exit fees can come in handy.
However, if you have another big dream in the works (like an international holiday) and you also want to freshen up your home, look for a lender who will let you select more than one loan purpose in the application. This means you’ll apply to borrow a suitable amount and your lender will know from the very start what you plan to spend your loan funds on, it’s a win-win.