Home Improvement Personal Loans

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Do your home renovations require more than a long weekend of DIY?

There are a number of options available in New Zealand to finance both minor and major home renovations. Here’s what you need to know about your available finance options and what to look out for when comparing home improvement loans.

What are home improvement personal loans?

Personal loans that are used to finance renovations or construction work generally fit into two categories: secured and unsecured. 

Secured Home Improvement Loan

A secured home improvement loan requires you to provide some form of collateral as security on the loan. Conditions for accepted collateral will vary between lenders, but will most commonly be a vehicle, property, or another valuable asset that can be resold by the lender in the case of a loan default. 

Unsecured Home Improvement Loan

An unsecured home improvement loan does not require any collateral and can be used by borrowers who do not wish to provide their home or vehicle as security on the loan, or whose assets do not qualify for security with the lender they wish to apply with.

In most cases, secured home improvement loans are easier to approve and have higher maximum borrowing limits with fewer and lower fees attached. 

You can qualify for a home improvement personal loan in New Zealand if you are:

  • 18 years or over
  • Currently employed with a sufficiently stable income to repay the loan amount
  • A permanent NZ resident or hold a work permit or visa allowing you to reside in New Zealand

If you meet the standard qualifying criteria for a personal loan, you can calculate how much you can borrow and compare lenders to find the best loan offers available in New Zealand before applying for a loan.

Another commonly used option is equity finance or mortgage finance, provided you have sufficient equity in your home and your mortgage agreement provides access to a redraw facility. 

In most cases (unless your property has significantly risen in value since purchase) you will need to have made extra repayments on your mortgage to access funds through a redraw facility. 

See How Much You Can Borrow for Renovations

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How to choose a home improvement loan

The first step to choosing a home improvement loan is to estimate the costs of your renovations or construction and compare your available options. This includes (but is not limited to) the following:

  • The number of individual rooms
  • The size of the individual rooms
  • The cost of any professional labour required
  • The cost of materials and additions required

You can use our Home Renovation Loan Calculator to help estimate the cost of a home renovation loan by calculating the planned costs of your renovations and comparing various repayment amounts over adjustable terms.

Once you’ve estimated the costs of your renovations, you’ll want to increase the amount by around 10-15 per cent to account for any delays, pricing variations, or issues experienced while renovations take place. This is important for two reasons:

  1. The cost of labour, materials or unplanned additions to your construction or renovations may vary (or require compromise due to availability) between the time you begin planning and when the project begins.
  2. It can be difficult to access additional finance should the initial loan amount be insufficient to complete your renovations. Applying for another loan within only a few months could affect your credit score or require you to pay significantly higher fees and charges to secure the remaining finance you need. 

Once you’ve done all the planning and calculated how you’ll want to borrow for your renovations, you’ll want to compare your available loan options and look for a lender and loan offer that is suitable for your project and how you plan to schedule repayments over the term of your home improvement loan.

See If You Qualify For A Home Improvement Loan

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