Renovations not on the radar

Renovations not on the radar

Posted on Monday, February 02 2015 at 10:57 AM

According to a study commissioned by financial comparison site, Australian homeowners are dodging renovations funded by the equity in their mortgage because it’s just too difficult.

The survey
of more than 1,000 homeowners found that the vast majority (90 per cent) have
never refinanced their home to renovate. Of those who haven’t refinanced to
renovate their home, only 17 per cent would consider it.

Almost three
in four (73 per cent) homeowners think it would be difficult to refinance their
mortgage to renovate and 14 per cent find the idea
overwhelming, with women slightly more overwhelmed than men.

Hutchison, money expert at, says she’s not surprised by the findings, given the decline
in borrowers financing home loans for alterations and additions.

borrowers are dodging the idea of refinancing their home to renovate because
they just don’t know where to start.

“We found
that the value of home loans being financed for alterations and additions
averaged $352 million per month for the past five years (since January 2010).
It’s almost halved compared to over a decade ago, hitting a peak of almost $640
million in one month in 2003.

“It’s not
surprising when our survey found that most people are in the dark with the
costs and value a reno will add,” she says.

The survey found that more than one in three homeowners who
haven’t refinanced to renovate are unsure how much
it would cost, if they can afford to, how much value it would add or where to

Of those who have refinanced to renovate,
the vast majority (93 per cent) had concerns whether they could afford to, what
their mortgage repayments would be and their biggest concern was how much value
it would add.

More than two in five homeowners (42 per cent)
are worried about rising interest rates, as unlocking equity to renovate means
borrowers will have a bigger mortgage with higher repayments.

“The problem with refinancing to renovate
is that every household is different,” Hutchison says. “Everyone has different
financial situations, mortgage sizes, equity and work needing or wanting to be
completed. The amount of money people want to spend can also vary

“It doesn’t need to be overwhelming if
you want to unlock equity to renovate your home,” she adds.

National average
costs for renovation jobs

Source:, Australian Institute of Architects

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