Skip the renovation grant. Fund your own dream home improvements with a renovation loan (it’s easier than you might think).
If talk of a renovation grant has got you thinking about home improvements, you might be surprised to learn you have to sink some serious money to access the government cash. For the $25,000 grant, you’ll need to stump up $150,000 of your own money first. Some dreams are big – second-home-loan-big.
So if your renos are south of the six-figure mark, a simple renovation loan might be a much more manageable option.
How much can I borrow?
A renovation loan is a type of personal loan to cover the costs of a home renovation. So it won’t be like committing to another mortgage. With Plenti, you can borrow between $2,000 and $50,000 for a loan term of 1 to 7 years depending on your loan type.
Paying for your home improvements with a renovation loan means you can pay it off in a much shorter amount of time than a home loan. Even though it might be at a slightly higher interest rate, fewer repayments mean you’ll keep more money in your pocket over the long run.
How much does a renovation loan cost?
Because a renovation loan is a personal loan, the overall cost is based on you, your needs and your situation. Lenders look into a range of factors regarding your credit history to provide you with a personalised interest rate.
There are three key features that make up the loan cost:
- Interest rate – whether it is fixed or variable
- Upfront fees – for example, establishment fees
- Ongoing fees – These include monthly fees, late payment fees, and other charges
These costs are then combined to create a comparison rate. This shows you the actual cost of the loan over a standard term. This is the rate you’ll want to use when making loan comparisons.
Who can apply?
We don’t want your loan to cause you financial strain, so we only loan to responsible borrowers. You generally need to meet the following criteria:
- You’re 21 years or older
- You’re an Australian citizen or permanent resident
- You have a regular income source that you can demonstrate
- You have a good credit history
If that sounds like you, complete our one-minute RateEstimate quote. It will give you a summary of your loan options and borrowing power along with a personalised interest rate and fees based on different loan terms. We reward good credit history, so the better your credit, the better the rates we can offer.
From there, you’ll select your preferred loan option and begin the easy online application process. It should only take about 10 minutes.
We’ll need to verify who you are, so be sure to have your Australian driver’s license, or a copy of your passport and documents verifying your current address, handy.
We’ll also need to check your income, expenses and liabilities (e.g. credit cards, loans, etc.). You can log in to a portal that allows you to connect to your bank account and share your data with us. Of course, you’ll need your bank login details for this.
For home renovation loans, you’ll also need additional documents outlining the type of renovations you plan to make and any estimates you may have received.
Finally, you’ll need to let us know where to send the money. This bank account will be the same account we use to set up your direct debit payment schedule. You’ll also have the flexibility to make extra repayments at any time.
Then we’ll look at your application and assess if a renovation loan is right for you. We’ll look at:
- Your employment stability
- Your income (e.g. salary, rent, interest, etc.)
- Your expenses (e.g. mortgage, groceries, etc.)
- Your repayment history
- Credit bureau information
- Other details you communicate to us
If we’re happy with how it looks, your loan will be approved, and you can get to work. No renovation grant needed.
What happens next?
Once your renovation loan application is approved and paperwork is finalised, we’ll transfer the funds to your nominated bank account the following business day. They should reach your bank account in 1-2 business days.
Your first monthly repayment will be debited directly from your nominated bank account, which you can change at any time by logging into your Plenti account. Remember that late payments will incur fees, so it’s important that you meet your monthly repayments. If things are going well, you can always make early repayments or pay your loan off in full at any time without incurring any additional charges.
Are renovation costs tax-deductible?
If your property is a rental or if you have plans of renting it out, you can claim the interest charged on your loan on your tax. But don’t expect to claim a tax deduction for the total cost of improvements to a rental property – you can only claim for work done for a repair or maintenance.
Examples of what you can claim include:
- Replacing broken windows
- Replacing guttering or downpipes
- Replacing a part of a fence due to damage (e.g. a fallen tree)
- Repairing electrical appliances
- Repainting interior wallsCleaning a swimming pool or oiling a deck
- Maintaining plumbing
You can’t claim for improvements. If you’ve made both repairs/maintenance and home improvements, you can only claim an income tax deduction for the cost of your repairs/maintenance. This means you’ll need to separate the cost of the repairs from the cost of the improvements.