What Are the Costs and Steps to Refinance for Renovations?

If you own a home in Carindale and you've been thinking about a renovation, you might already have the funds sitting in your property.

Refinancing to access equity means borrowing more than you currently owe and taking the difference as cash. The lender values your home, works out how much you can borrow against that value, and the additional amount is released to you at settlement. You can then use those funds to renovate, add a deck, upgrade the kitchen, or tackle whatever makes the home work for your family.

The process is similar to a standard refinance, but instead of keeping your loan amount the same or reducing it, you increase the amount borrowed. The key is making sure the numbers still work for your household and that your property has enough equity to support the increase.

What Equity Means and How Much You Can Access

Equity is the difference between what your home is worth and what you owe on the mortgage. Most lenders will allow you to borrow up to 80% of your property's current value without needing to pay lenders mortgage insurance. If your home is valued at the Carindale median and you owe less than 80% of that value, the gap between what you owe and that 80% threshold is your usable equity.

Consider a homeowner in Carindale whose property is valued around the suburb median. They owe $600,000 on their current loan. If the lender values the property at $1,300,000, 80% of that value is $1,040,000. That means they could potentially borrow up to $1,040,000, leaving $440,000 in accessible equity before factoring in refinance costs. After setting aside funds for discharge fees, valuation, and settlement, they might comfortably access $420,000 to $430,000 for the renovation.

Not all of that equity needs to be drawn. You only borrow what the project requires. But knowing how much is available helps you plan the scope of the renovation and avoid coming up short halfway through the build.

How the Lender Values Your Property

The lender will organise a valuation once your application is lodged. This is usually a desktop valuation or a kerbside inspection rather than a full internal inspection, though some lenders will send a valuer through if the property type or location requires it.

Carindale's market has remained stable with strong demand from families drawn to the Westfield precinct, access to quality schools including Belmont State School and San Sisto College, and proximity to the Gateway Motorway. Valuations in the suburb tend to reflect recent comparable sales, and because the area is well established with relatively consistent housing stock, lenders are generally comfortable lending against properties here.

If your home has already been partially renovated or is in better condition than comparable sales, mention that in your application. It won't guarantee a higher valuation, but it gives the valuer context. If the valuation comes in lower than expected, you can challenge it with evidence of recent sales or request a second valuation, though that may delay settlement.

What the Borrowed Funds Can Be Used For

Lenders will want to know what the funds are for, and renovation is one of the most straightforward uses. You'll usually need to provide quotes or a scope of works from your builder or tradesperson. The lender isn't assessing the renovation itself, but they do want to see that the funds are being used to improve the property rather than for purposes that don't add value or increase risk.

In our experience, most Carindale clients accessing equity are funding kitchen and bathroom upgrades, adding a second storey, enclosing a carport, or building a deck or outdoor entertaining area. These are all considered reasonable uses. If you're planning to use some of the funds for landscaping, pool installation, or solar, include those in the quote as well. As long as the work is being done to the property securing the loan, it's usually fine.

If you're planning to use a portion of the funds for something unrelated to the renovation, such as paying off a car loan or credit card, that's also possible under a cash out refinance. Lenders may treat that differently depending on the amount and your overall borrowing capacity, so it's worth discussing upfront.

How Borrowing Capacity Is Assessed

Just because you have equity doesn't mean you can automatically borrow against it. The lender still needs to be satisfied that you can service the higher loan amount. They'll assess your income, household expenses, and any other debts to work out your borrowing capacity.

If your income has increased since you first took out the loan, or if you've paid down other debts, your capacity may have improved. If your expenses have increased or your income has stayed flat, the lender may approve a smaller amount than the equity would technically allow.

As an example, a couple refinancing in Carindale to access $150,000 for a renovation had a combined income of $180,000 and minimal other debt. Their current loan repayments were around $3,200 per month. The new loan amount would increase repayments to approximately $4,100 per month. The lender's serviceability calculator showed they could comfortably manage the higher repayment, so the application proceeded without issue. If their expenses had been higher or their income lower, the lender might have capped the additional borrowing at a smaller amount or required them to reduce other commitments first.

The Difference Between Refinancing and a Top-Up with Your Current Lender

You can access equity by refinancing to a new lender or by staying with your current lender and requesting a loan increase. Both achieve the same result, but the process and outcome can differ.

Refinancing to a new lender gives you the opportunity to secure a lower interest rate, switch to a loan structure that suits your current situation, and potentially access better features such as offset accounts or redraw. It also means your current lender has to compete if they want to keep you, which sometimes results in a retention offer.

Topping up with your existing lender is faster because there's no need to discharge the current loan, and you avoid some of the upfront costs associated with switching. However, you're limited to whatever rate and terms your current lender offers, and they may not be the most competitive in the market at the time.

We regularly see clients who assume their current lender will give them the outcome they need, only to find the rate offered is higher than what's available elsewhere or the loan increase is capped below what they require. It's worth comparing both options before committing. A loan health check can show whether refinancing delivers a outcome in terms of rate, features, and borrowing capacity.

What Costs Are Involved in the Refinance

Refinancing to access equity involves several costs, and these need to be factored into your budget. You'll typically pay a discharge fee to your current lender, a settlement fee to the new lender, valuation costs, and possibly legal fees if your solicitor or conveyancer is managing the process.

Discharge fees are usually between $300 and $500. Valuation costs vary depending on the property type and location, but in Carindale you'd expect to pay between $200 and $400 for a standard house valuation. Settlement fees with the new lender are generally between $600 and $1,000. If you're using a solicitor, their fees will depend on the complexity of the transaction, but for a straightforward refinance you'd budget around $800 to $1,200.

Some lenders will cover certain costs such as valuation or legal fees as part of a refinance package, particularly if you're borrowing a larger amount. If cost is a concern, mention that during the application process. There's often room to negotiate, especially if you're a strong borrower.

You can choose to pay these costs upfront or add them to the loan amount. Adding them to the loan increases the total borrowed and the interest paid over time, but it means you don't need to find the cash at settlement.

How Long the Process Takes from Application to Settlement

From the time you submit a full application to the time the funds are available, most refinances take between four and six weeks. That assumes your paperwork is complete, the valuation is ordered promptly, and there are no issues with the title or the property.

If you need the funds by a specific date to meet a builder's deposit or schedule, let your broker know upfront. Some lenders are faster than others, and some will prioritise applications if there's a genuine timing need. Carindale is a well-established suburb with straightforward title in most cases, so there's rarely a delay caused by the property itself.

Once the loan is approved and the valuation is accepted, you'll receive a loan contract. After you sign and return it, the lender will book settlement. The funds are usually available within a few days of settlement, either transferred to your account or paid directly to your builder depending on how you've arranged it.

When Refinancing to Access Equity Makes Sense

Accessing equity through refinancing works well when the renovation adds value to the property, when your household can comfortably service the higher loan amount, and when the interest rate on the mortgage is lower than other forms of borrowing such as a personal loan or credit card.

It's less suitable if your equity position is tight, if your income or employment has recently changed in a way that affects serviceability, or if the renovation cost is small enough that paying for it from savings or a lower-cost option makes more sense.

Refinancing also makes sense when your current loan no longer suits your needs. If you're on a rate that's higher than the current market, or if your loan lacks features such as offset or redraw that would help you manage the higher balance, refinancing solves both problems at once.

Call one of our team or book an appointment at a time that works for you using our online calendar. We'll walk through your equity position, work out how much you can access, and make sure the refinance is structured in a way that supports both the renovation and your long-term financial position.

Frequently Asked Questions