How much equity can I release?

Up to 80% LVR. $1M home with $400K loan = up to $400K cash-out.

Cash-out refinance vs construction loan — what's the difference?

Cash-out: lump sum for smaller reno. Construction: progressive draws for major work.

Will the renovation increase my property value?

Kitchen/bathroom add 70-80% of cost. Extensions vary. Cosmetic vs structural matters.

Do lenders require licensed builder?

Construction loans yes; smaller cash-out often no. Owner-builder harder.

Tax deductibility of renovation loan?

Investment property: deductible. Owner-occupied: not. Confirm with accountant.

Equity Release Refinancing

Who this guide is for

Australian homeowners with equity in their property wanting to fund renovation — kitchen, bathroom, extension, full overhaul.

Owners with $100K+ equity wanting to fund renovation
Buyers planning major renovation post-purchase
Landlords renovating investment property to add value
Multi-generational families adding granny flat or extension

The local picture

Equity release for renovation has multiple pathways: refinance with cash-out, line of credit, dedicated construction loan. Each has different terms and tax treatment. Most general brokers don't explain the tradeoffs clearly.

How Mortgagefy helps locally

Mortgagefy explains your equity release options based on your renovation type and budget. We identify the best lender and structure for your specific scenario.

Free advice.

How it works — 4 simple steps

Free renovation chat

20-minute call about your renovation plans and current loan.

Map equity options

We outline cash-out refinance, line of credit, construction loan.

Application support

We compile valuation, renovation plans, contractor quotes.

Settle and renovate

Funds released, you start renovating.

Frequently asked questions

We use offer letters and vesting schedules to value RSUs conservatively. We present current vesting value + projected future vesting as a 3-5 year income average. This gives lenders confidence in your income stability while accounting for market volatility.

Both. We work with W2 employees, 1099 contractors, and consultants. For contractors, we use 2 years of tax returns plus business financials. We have lenders who specialise in contractor income—they understand the variability.

Unvested options have zero value for refinancing. We count only vested equity. If you have a 4-year vest, we use 25% of the grant value (what's vested) plus a conservative projection of future vesting.

If you've been in your new role 6+ months, most lenders will refinance. We'll use your offer letter plus 6 months of pay stubs. If less than 6 months, it's harder but possible with specialist lenders.

Yes, if you have 2+ years of bonus history. We average the past 2 years and present it conservatively. Some bonuses get counted at 50% to be conservative with variable compensation.

ESPP is counted as deferred compensation. If your company matches or you have a discount, we value it as part of total compensation package.

Talk to us about renovation equity release

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How Equity Release Works for Renovations

Step-by-Step Equity Release

1. Get a property valuation. Current value = $600k (you bought at $500k 2 years ago)
2. Calculate equity. Current debt = $400k (original $500k loan, paid down $100k). Equity = $200k (property value minus debt)
3. Refinance with same or new lender. New loan = $480k (80% LVR of $600k value). Old loan was $400k. Draw $80k cash.
4. Use $80k for renovation. Costs: new kitchen ($25k), bathroom ($20k), roof repairs ($15k), landscaping ($20k) = $80k.
5. Property value increases post-reno. After reno, property now valued at $700k. Equity increased to $220k.

Debt Serviceability for Equity Release

Lender tests your ability to repay the FULL new loan amount:

Old loan: $400k at 6.0% = $24k/year interest
New loan: $480k at 6.0% = $28.8k/year interest
Serviceability gap: $4.8k/year ($400/month) increase in repayments
Lender tests at: 8.0% (stress rate) = $38,400/year = need $38.4k/year extra income OR existing buffers

Tax Deductibility: Key Trap

CAUTION: Interest on equity release for renovations is NOT tax deductible if the property is your home.

Deductible: Interest on loan for investment property renovations
NOT deductible: Interest on loan for owner-occupied home renovations (treated as personal use)
Trick: If you renovate and then rent out rooms, lender view = personal use = no deduction. Consult accountant.

Best Renovation ROI Projects

Not all renovations add equal value. Strategic picks increase property value more than cost:

Kitchen (cost $25k → adds $40k value): 160% ROI, highest impact
Bathroom (cost $18k → adds $25k value): 139% ROI
Roof/structural (cost $15k → adds $15k): 100% ROI, essential but not premium-adding
Cosmetics: paint/flooring (cost $5k → adds $8k): 160% ROI, good value

Model your scenarios: Use our free home loan calculators to estimate borrowing capacity, repayments, and savings.

Equity Release for Renovation Home Loan in Australia