Showing personal loans for
$
over
for a credit score of
Advertised Rate

12.69%

Fixed

Comparison Rate*

13.56%

Company
NAB
Monthly repayment

$1006

36 months

Loan term

1 year to 7 years

Total repayments
Real Time Rating™

2.99

/ 5
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Total repayments for a 3-year, $30,000 loan at 13.56% would be $36,228*. Terms from 1-7 years

More details
Advertised Rate

12.69%

Variable

Comparison Rate*

13.56%

Company
NAB
Monthly repayment

$1006

36 months

Loan term

1 year to 7 years

Total repayments
Real Time Rating™

3.08

/ 5
Go to site

Total repayments for a 3-year, $30,000 loan at 13.56% would be $36,228*. Terms from 1-7 years

More details

Summary

  • Many people choose to renovate their home as a way to potentially increase their property’s value.
  • If you cannot or prefer not to pay in cash upfront, you could consider funding a renovation project by taking out a personal loan.
  • Personal loans generally have lower interest rates than credit cards but higher rates than home loans.
  • Keep in mind that renovating your property does not necessarily guarantee that your home’s value will go up. Also, not every type of renovation will help bring up the value of your home.

Learn more about personal loans

From large-scale makeover projects to smaller DIY projects, home renovations could increase the overall value of the home by making it more modern or functional. Not only that, but you or your tenants can also enjoy a newly refurbished home.

A personal loan is one way to fund your home renovation project. You should be aware of a personal loan’s features and fees before deciding on which loan is best for you. It is always wise to research different types of loans and compare multiple options before settling on your final choice.

Why use a personal loan for a home renovation?

It’s not uncommon for people to borrow money for a renovation because they don’t have enough cash available. There are several different ways that you can fund a home makeover if you are unable to or prefer not to pay in cash, including: 

The total project cost will be different depending on how you decide to fund it.

The advantage of taking out a personal loan to complete your home renovation is that personal loans often charge lower interest rates than credit cards, especially if you take out a secured personal loan. This can help keep the long-term costs of borrowing money to a minimum.

Using a personal loan can also minimise the time spent paying back the loan, which may mean less total interest paid on the loan. In contrast, accessing funds from your home loan's redraw facility to use for a renovation could mean paying more interest over time, despite the home loan’s lower interest rate. This is because the loan amount will be paid back over your home loan’s term, which is typically much longer than that of a personal loan. Consider speaking to a mortgage broker for more information about redrawing from your mortgage.

But be aware of the potential costs attached to taking out a personal loan for a home renovation. For starters, personal loans will always charge you interest and some may also charge upfront and/or ongoing fees on top of the interest. Importantly, completing a renovation to your property does not necessarily lead to an uplift to the home’s value.

What are the pros and cons of taking out a personal loan for a home renovation?
  • Personal loans generally have lower interest rates than credit cards.
  • Some lenders offer features to make the loan more flexible for borrowers, e.g. the ability to make extra repayments.
  • Borrowers can typically pay back the loan over a fixed term of three to seven years.
  • Fees are usually charged to set up and keep the personal loan.
  • Personal loans generally charge higher interest rates than home loans.
  • Not all personal loans will be flexible and some may charge you fees for paying off the loan early.
  • There is a chance your property’s value will not increase despite taking out a personal loan and undertaking a renovation.

What features of a personal loan should I know about?

Finding the right combination of personal loan features could help you secure a loan that is suited to your own personal financial situation. 

  • Secured personal loan - This is a loan where you offer up an asset as security that the bank will sell if you fail to make the payments on your loan. As there is an added layer of security for the bank, these loans may offer lower interest rates than unsecured personal loans.
  • Fixed and variable interest rates - Personal loan interest rates come in both fixed and variable forms. Fixed loans will have one interest rate that keeps your monthly repayment amount steady over the loan term. Variable personal loans generally have a lower interest rate than fixed loans but will be subject to rate rises according to market conditions. The option that will best suit you may depend on if you require your monthly repayment amount to be consistent and how much room there is in your budget for fluctuation.
  • Fees - Personal loans will also charge varying fees that you should be aware of before you sign on to the loan. These could include upfront fees as well as ongoing fees. You should ask your prospective lender for a summary of all the costs involved in taking out the loan you are interested in before you commit to anything.
  • Extra repayments - Finding a loan that allows you to make extra repayments and pay off the loan early will give you more control over how long you have the loan for and how much you pay in interest by the end of the loan. You will find that the faster you can pay down the loan, the more you will save over time. But some lenders will charge you break fees if you pay off your loan earlier than specified.  You can investigate different loan terms and the amount of interest you might need to pay with these loan terms using RateCity’s Personal Loan calculator

How can I use a personal loan to add value to my home?

Using a personal loan to renovate your property can be a good way to increase its value. By updating a kitchen or adding an outdoor area to your home, you could potentially be boosting your property’s resale value.

It is important to remember that not all home improvements will add value to your home. If this is your primary goal, then you should research what type of renovation could make your home more attractive to buyers. It is generally agreed that a refurbished kitchen or bathroom are most likely to add value to an older property.

Minor home improvements could also bring up the value of your home without being too expensive or disrupting living arrangements of residents. Things like replacing old carpet in bedrooms or adding a fresh lick of paint could help boost the value of your home.

Keep in mind that not every type of renovation will help bring up the value of your home. For example, painting the walls dramatic colours or adding fixtures and fittings that may not be to everyone’s taste could turn away both buyers and tenants.

How to apply for a home renovation personal loan in Australia

Applying for a home renovation personal loan may be a simpler process than you think. Consider the following steps:

  1. Check your credit score: If you haven't checked your credit score recently, consider visiting RateCity's credit score hub to find out. Once you know your credit score, you’ll have a better idea of which loan products and interest rates might be available to you.
  2. Consider your budget: Use a personal loan calculator to get a loan repayment estimate, including the total cost of the loan and total interest payable. This could help you make a more informed decision based on what works with your budgeting requirements.
  3. Search and compare personal loans: RateCity makes it easy for you to compare a wide range of personal loan products from over 90 Australian lenders, so you can find options that suit your individual needs.
  4. Ensure you're eligible: After compiling a shortlist of potential personal loan products, it's time to check whether you meet all of the eligibility criteria. Remember, these can differ from one loan to the next. Consider reaching out to the lender if you have any questions.
  5. Begin the application process: When comparing personal loans at RateCity, you can click directly through to the lender's website to apply online for your preferred car loan. Consider having all of your required documentation handy before you get started on your loan application.
  6. Submit your application and await a decision: Once you submit the required documentation, simply await communication from the credit provider with an update on your application status. Personal loan approval times vary, and could take a few hours or a few days.

Frequently asked questions

Can I merge my personal loan with my home loan?

Yes, you can refinance your home loan and, in the process, merge or consolidate your personal loan and home loan. By doing so, you can lower the number of debts you have, and you may also reduce the total interest you have to pay.

However, you should consult a financial advisor or a mortgage broker to confirm that you are decreasing your total outstanding debt, including interest payments. The repayment term for a home loan can be much longer than that for a personal loan, and by merging the two, you could be repaying a higher amount over the full term.

Can you refinance a $5000 personal loan?

Much like home loans, many personal loans can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.

If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.

What is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.

Loan sizes typically range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

Should I get a fixed or variable personal loan?

Fixed personal loans keep your interest rate the same for the full loan term, while interest rates on variable personal loans may be raised or lowered during your loan term.

A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent. You won't have to worry about higher repayments if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.

Is a personal loan a variable or fixed-rate loan?

Depending on the personal loan lender, you may be able to choose between a fixed and a variable interest rate. But, there are a few distinct differences between the two, so it’s important to weigh up the pros and cons before deciding on what’s right for you.

A fixed interest rate loan gets you the convenience of knowing exactly how much you need to repay each fortnight or month. On the other hand, you generally won’t be able to make lump sum or advanced payments to close your personal loan early - or at least not without a penalty.

With a variable interest rate personal loan, you may be able to get a longer loan repayment term, with the option of paying off the loan early. You typically won’t need to pay any additional charges for an early full repayment either. The potential disadvantage with an interest rate that can change is that your repayment is not entirely predictable, as it can fluctuate with the market. However, you’ll likely have more options as more lenders offer a variable interest rate personal loan.

Can I repay a $3000 personal loan early?

If you receive a financial windfall (e.g. tax refund, inheritance, bonus), using some of this money to make extra repayments onto your personal loan or medium amount loan could help reduce the total interest you’re charged on your loan, or help clear your debt ahead of schedule.

Check your loan’s terms and conditions before paying extra onto your loan, as some lenders charge fees for making extra repayments, or early exit fees for clearing your debt ahead of the agreed term.

Does refinancing a personal loan hurt your credit score?

Personal loan refinancing means taking out a new loan with more desirable terms in order to access a more competitive interest rate, longer loan term, better features, or even to consolidate debts.

In some situations, refinancing a personal loan can improve your credit score, while in others, it may have a negative impact. If you refinance multiple loans by consolidating these into one loan, it could improve your credit score as you’ll have only one outstanding debt liability. Your credit may also improve if you consistently pay the instalments on time.

However, applying to refinance with multiple lenders could negatively affect your credit if your applications are rejected. Also, if you delay or default the repayment, your credit score reduces.

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

How much can you borrow with a bad credit personal loan?

Borrowers who take out bad credit personal loans don’t just pay higher interest rates than on regular personal loans, they also get loaned less money. Each lender has its own policies and loan limits, but you’ll find it hard to get approved for a bad credit personal loan above $50,000.

How can I improve my credit rating/score?

Your credit score will improve if you demonstrate that you’ve become more credit-worthy. You can do that by minimising loan applications, clearing up defaults and paying bills on time.

Another tip is to get the one free credit report you’re entitled to each year – that way, you’ll be able to identify and fix any errors.

If you want to fix an error, the first thing you should do is speak with the credit reporting body, which may take care of the problem or contact credit providers on your behalf.

The next step would be to contact your credit provider. If that doesn’t work, you can refer the matter to the credit provider’s independent dispute resolution scheme, which would be the Australian Financial Complaints Authority (AFCA).

AFCA provides consumers and small businesses with fair, free and independent dispute resolution for financial complaints.

If that doesn’t work, your final options are to contact the Privacy Commissioner and then the Office of the Information Commissioner.

Can I get a personal loan if I receive Centrelink payments?

It is hard, but not impossible, to qualify for a personal loan if you receive Centrelink payments.

Some lenders won’t lend money to people who are on welfare. However, other lenders will simply consider Centrelink payments as another factor to weigh up when they assess a person’s capacity to repay a loan. You should check with any prospective lender about their criteria before making a personal loan application.

Can I get guaranteed approval for a bad credit personal loan?

Few, if any, lenders would be willing to give guaranteed approval for a bad credit personal loan. Borrowers with bad credit histories can have more complicated financial circumstances than other borrowers, so lenders will want time to study your application. 

It’s all about risk. When someone applies for a personal loan, the lender evaluates how likely that borrower would be to repay the money. Lenders are more willing to give personal loans to borrowers with good credit than bad credit because there’s a higher likelihood that the personal loan will be repaid. 

So a borrower with good credit is more likely to have a loan approved and to be approved faster, while a borrower with bad credit is less likely to have a loan approved and, if they are approved, may be approved slower.

What causes bad credit ratings/scores?

Failing to repay loans and bills will damage your credit score. So will falling behind on your repayments. Your credit score will also suffer if you apply for credit too often or have credit applications rejected.

How long does it take to get a bad credit personal loan?

In the best-case scenario, an application for a bad credit personal loan can be made within minutes and then be approved within 24 hours. However, if a lender needs more information or needs more time to verify the provided documents, the application process may take longer.

Which lenders offer bad credit personal loans?

Several dozen lenders offer bad credit personal loans in Australia. These are generally smaller lenders that aren’t household names.

How do I consolidate my debt if I have bad credit?

The worse your credit history, the harder you will find it to consolidate your debts, because lenders will be less willing to lend you money and will charge you higher interest rates.

However, people with bad credit histories can make debt consolidation work by following this three-step process:

  1. First, find a lender willing to give you a bad credit personal loan. This process will be simplified if you go through a finance broker or use a comparison website like RateCity.
  2. Second, make sure the interest repayments on your new loan are less than the repayments on the loans being replaced.
  3. Third, instead of spending those savings, use them to pay off the new loan.

What interest rates are charged for personal loans?

Lenders aren’t allowed to charge interest on loans of $2,000 and under. Instead, they make their money by charging a one-off establishment fee of up to 20 per cent and a monthly account-keeping fee of up to four per cent. Lenders might also ask you to pay a government fee.

For loans between $2,001 and $5,000, lenders can make their money in only two ways: a one-off fee of $400 and annual interest rates of up to 48 per cent.

For loans of $5,001 and above, or for loans that have terms longer than two years, lenders can charge annual interest rates of up to 48 per cent.

Those fee caps don’t apply to loans offered by authorised deposit-taking institutions such as banks, building societies or credit unions, although such institutions are highly unlikely to charge interest rates of anywhere near 48 per cent.

Can I get an easy/instant personal loan?

Some lenders are able to approve applications with little documentation and within minutes. However, there is a catch. People who take out easy/instant loans generally pay higher interest rates and are restricted to lower amounts than people who follow a traditional borrowing process.

How do I find out my credit rating/score?

You're entitled to one free credit report per year from credit reporting bodies like Equifax, Dun & Bradstreet, Experian and the Tasmanian Collection Service. You can also get a free report if you’ve been refused credit in the past 90 days.

Credit reporting bodies have up to 10 days to provide reports. If you want to access your report sooner, you’ll probably have to pay.