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.

Find and compare home improvement personal loans

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Monthly repayment
Loan term
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5.60%

Variable

5.70%

Family First Credit Union

$907

36 months

0 year to 10 years

4.41

/ 5
More details

6.99%

Fixed up to 25.69%

7.79%

Harmoney

$926

36 months

3 years

3.87

/ 5
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More details

11.99%

Variable

12.61%

Heritage Bank

$996

36 months

1 year to 5 years

3.16

/ 5
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More details

12.69%

Variable

13.56%

NAB

$1006

36 months

1 year to 7 years

3.07

/ 5
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More details

15.99%

Variable

16.84%

ANZ

$1055

36 months

1 year to 7 years

2.61

/ 5
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More details

4.45%

Variable

4.65%

Endeavour Mutual Bank

$892

36 months

0 year to 7 years

4.71

/ 5
More details

4.61%

Variable

11.42%

Coastline Credit Union

$894

36 months

1 year to 7 years

4.65

/ 5
More details

4.61%

Variable

5.96%

Coastline Credit Union

$894

36 months

1 year to 7 years

4.65

/ 5
More details

4.95%

Fixed

4.95%

Hume Bank

$898

36 months

1 year to 5 years

4.68

/ 5
More details

5.31%

Variable

5.59%

Bank of us

$903

36 months

0.5 year to 10 years

4.41

/ 5
More details

5.60%

Variable up to 5.74%

5.60%

Family First Credit Union

$907

36 months

0 year to 10 years

4.41

/ 5
More details

5.04%

Variable

5.64%

Summerland Credit Union

$900

36 months

0 year to 7 years

4.40

/ 5
More details

4.85%

Variable up to 11.9%

5.71%

Australian Military Bank

$897

36 months

1 year to 7 years

4.54

/ 5
More details

4.85%

Fixed up to 11.9%

5.71%

Australian Military Bank

$897

36 months

1 year to 5 years

4.52

/ 5
More details

5.79%

Variable

5.92%

Police Bank

$910

36 months

1 year to 7 years

4.39

/ 5
More details

5.79%

Variable

5.92%

Bank of Heritage Isle

$910

36 months

1 year to 7 years

4.33

/ 5
More details

5.89%

Variable

6.10%

Horizon Bank

$911

36 months

0 year to 10 years

4.46

/ 5
More details

5.95%

Fixed

6.16%

Hume Bank

$912

36 months

1 year to 5 years

4.36

/ 5
More details

5.99%

Variable

7.71%

Horizon Bank

$913

36 months

0 year to 10 years

4.39

/ 5
More details

6.44%

Variable

6.68%

First Option Bank Ltd

$919

36 months

1 year to 7 years

4.21

/ 5
More details

6.09%

Variable

6.69%

Summerland Credit Union

$914

36 months

0 year to 7 years

4.22

/ 5
More details

6.70%

Fixed

6.70%

AWA Alliance Bank

$922

36 months

1 year to 7 years

4.12

/ 5
More details

6.45%

Fixed

6.80%

IMB Bank

$919

36 months

1 year to 5 years

4.10

/ 5
More details

6.49%

Fixed

6.88%

Beyond Bank Australia

$919

36 months

0 year to 7 years

4.16

/ 5
More details

6.49%

Fixed

6.88%

Greater Bank

$919

36 months

1 year to 7 years

4.23

/ 5
More details

6.95%

Fixed up to 17.95%

8.57%

Pepper

$926

36 months

1 year to 7 years

3.63

/ 5
More details

5.99%

Variable

6.20%

G&C Mutual Bank

$913

36 months

0 year to 7 years

4.37

/ 5
More details

6.49%

Fixed

7.19%

RACV

$919

36 months

1 year to 5 years

4.01

/ 5
More details

6.61%

Variable

7.31%

Bank of Queensland

$921

36 months

0 year to 10 years

3.92

/ 5
More details

7.05%

Fixed up to 7.99%

7.40%

OurMoneyMarket

$927

36 months

1 year to 7 years

3.95

/ 5
More details

6.90%

Fixed

7.50%

SERVICE ONE Alliance Bank

$925

36 months

0 year to 7 years

4.02

/ 5
More details

7.49%

Fixed

7.49%

Beyond Bank Australia

$933

36 months

0 year to 7 years

4.02

/ 5
More details

6.99%

Fixed

7.62%

Beyond Bank Australia

$926

36 months

0 year to 7 years

4.05

/ 5
More details

7.65%

Fixed up to 10.49%

7.65%

Money Place

$935

36 months

3 years to 7 years

3.93

/ 5
More details

7.99%

Fixed

7.99%

Beyond Bank Australia

$940

36 months

0 year to 7 years

3.92

/ 5
More details

7.79%

Fixed up to 10.49%

8.14%

Plenti

$937

36 months

3 years to 5 years

3.89

/ 5
More details

7.75%

Variable

8.03%

Coastline Credit Union

$937

36 months

0 year to 10 years

3.96

/ 5
More details

7.89%

Variable

8.92%

Bank Australia

$939

36 months

0 year to 10 years

3.96

/ 5
More details

7.90%

Variable

8.15%

Circle Alliance Bank

$939

36 months

1 year to 7 years

3.88

/ 5
More details

7.99%

Variable

8.20%

Sydney Mutual Bank

$940

36 months

0 year to 7 years

4.04

/ 5
More details

7.99%

Variable

8.20%

Endeavour Mutual Bank

$940

36 months

0 year to 7 years

4.01

/ 5
More details

7.29%

Fixed

8.20%

BDCU Alliance Bank

$930

36 months

1 year to 5 years

3.96

/ 5
More details
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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 personal loans, credit cards and redrawing on your current mortgage. 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 also minimises the time spent paying back the loan, which may mean less total interest paid on the loan. In contrast, when redrawing funds from your home loan to use for a renovation, you could be 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.

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?

Pros
  • 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.
  • Usually borrowers may pay back the loan over a fixed term of typically three to seven years.
Cons
  • 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.

FAQs

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.

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.

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.

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.

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.

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.

What do single parents need for a personal loan application?

Much like applying for other personal loans, applying for personal loans for single parents will likely require the following:

  • Proof of identity
  • Proof of residence
  • Proof of income
  • Details of assets (e.g. car, home)
  • Details of liabilities (e.g. credit cards, other loans)
  • Loan amount
  • Loan term

Do student personal loans require security?

While some personal loans can be secured by the value of an asset, such as a car or equity in a property, student personal loans are often unsecured, which typically have higher interest rates.

Some lenders also offer guarantor personal loans to students. These loans have lower interest rates, as a guarantor (usually a relative of the borrower with good credit) will fully or partially guarantee the loan, taking on the financial responsibility if the borrower defaults.

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.

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.

How are credit ratings/scores calculated?

Different credit reporting bodies may use different formulas to calculate credit scores. However, they use the same type of information: credit history and demographic profile.

They’re likely to look at how many credit applications you’ve made, which lender the applications were for, what purpose they were for, how much they were for and your repayment record. They’ll also look at your age and postcode. They’ll also look to see if you’ve had any bankruptcies or other relevant legal judgements against you.

Your score can change if your demographic profile changes or new information is added to your file (such as a new loan application) or existing information is removed from your file (i.e. because it has reached its expiry date).

What is bad credit?

A person is deemed to have ‘bad credit’ when they have a poor history of managing credit and repaying debts.

What is an unsecured bad credit personal loan?

A bad credit personal loan is ‘unsecured’ when the borrower doesn’t offer up an asset, such as a car or jewellery, as collateral or security. Lenders generally charge higher interest rates on unsecured loans than secured loans.

What is debt consolidation?

Debt consolidation is the process of rolling several old debts into one new debt, usually to save money or for the sake of convenience.

What are the pros and cons of bad credit personal loans?

In some instances, bad credit personal loans can help people with bad credit history to consolidate their debts, which can help make it easier for them to clear those debts. This is because the borrower might be able to consolidate several debts with higher interest rates (such as credit card loans) into one single debt with a lower interest rate and potentially fewer fees.

However, this strategy can backfire if the borrower spends the loaned funds instead of using it to repay the new loan. Another disadvantage of bad credit personal loans is that they have higher interest rates than regular personal loans.

What's a credit report?

A credit report is a record of your credit history, which covers your credit enquiries, borrowings and your repayments. The report will include information about any bankruptcies or other relevant legal judgements. It will also include biographical information such as your address, date of birth, driver's licence number and employment history. 

What is a bad credit rating/score?

Credit ratings or credit scores are calculated by credit reporting bodies such as Equifax, Dun & Bradstreet, Experian and the Tasmanian Collection Service. These are separate organisations, so they use different systems.

Equifax gives scores between 0 and 1,200:

  • 833 to 1,200 = Excellent
  • 726 to 823 = Very good
  • 622 to 725 = Good
  • 510 to 621 = Average
  • 509 or less = Below average

Dun & Bradstreet (through the Credit Simple service) gives scores between 0 and 1,000:

  • 800 to 1,000 = High end
  • 700 to 799 = Great
  • 500 to 699 = Average
  • 300 to 499 = Room to improve
  • 299 or less = Low

Experian gives scores between 0 and 999:

  • 961 to 999 = Excellent
  • 881 to 960 = Good
  • 721 to 880 = Fair
  • 561 to 720 = Poor
  • 0 to 560 = Very poor

The Tasmanian Collection Service doesn’t give scores. Instead, it prepares credit reports for credit providers and then lets those providers make their own assessment.