Have cash, but would you take a loan for renovations?

Discussion in 'Loans & Mortgage Brokers' started by MaryOhMe, 6th Mar, 2022.

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  1. MaryOhMe

    MaryOhMe New Member

    Joined:
    23rd Feb, 2022
    Posts:
    3
    Location:
    Sydney
    Hi all,

    I'm just wondering the best way to finance my renovations.

    I have had some quotes from builders are all it falls around 150k in renovations. Plus a few extra thousand for furnishings. This is a PPOR.

    Combined with my partner, we do have the cash to fully fund the renovations, however would that be the best way to go about it?

    I was thinking of taking out a construction loan purely as a way not to destroy my cashflow. Or am I just overthinking it?

    Cheers
     
    MaryOhMe, 6th Mar, 2022
    #1
  2. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

    Joined:
    23rd Aug, 2015
    Posts:
    1,568
    Location:
    Bella Vista
    Taking out equity for renovations is normal, some lenders will give you the cash on hand while some will do it as a construction loan.
     
    Tony Xia, 6th Mar, 2022
    #2
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  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,629
    Location:
    Gold Coast (Australia Wide)
    For risk management and surviveability, the best practice approach usually is to hold your cash back for challenge or opportunity.

    Borrow when you least need it, though lending laws introduced post Royal Commission have made this an "unethical" thing for a lender or broker to do.

    Yet, for client best interest duty, which is later legislation, where it can be clearly demonstrated that its in the borrowers best interest ( ie risk management) the 2 rules clash

    ta
    rolf
     
    Rolf Latham, 6th Mar, 2022
    #3
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