There’s nothing more exciting than transforming your home into a space that better suits your lifestyle. Whether it’s a sleek new kitchen, a second-storey extension, or finally updating that tired bathroom, a well-planned renovation can add real value not just to your home, but to how you live in it.
But here’s the reality many Australians face: renovation costs can easily spiral out of control, and many homeowners end up using emergency savings or high-interest renovation finance options to finish the job.
So, how do you protect your renovation dreams from becoming a budget nightmare?
In this guide, we’ll walk you through eight of the most common home renovation mistakes that could blow your budget or delay your renovation loan approval. Along the way, you’ll also learn how Ausfirst Lending Group can help you access the right finance solution, keep your costs on track, and set you up for long-term financial confidence.
1. Underestimating the True Cost of Renovating
Renovation budgets often fall short, with many Australian homeowners overspending due to unexpected costs. According to a survey by Budget Direct, almost 60% of Australians had to pause their renovation plans for financial reasons, highlighting the prevalence of budget overruns.
While most people budget for builders and materials, other expenses are frequently missed: site clean-up, council inspections, temporary fencing, electrical switchboard upgrades, or even asbestos removal in older homes. These can add tens of thousands to your bill before the exciting stuff even begins.
That’s why it’s crucial to build in a 10–20% contingency buffer from the start. And when we help clients set up their renovation loan or equity release, we don’t just focus on the construction estimate. We look at the full scope, including those hidden costs most people don’t think of until it’s too late.
2. Skipping Council Approval or Misunderstanding Permit Requirements
Many homeowners assume council approval is only needed for major extensions, but even internal works can trigger compliance obligations. Removing a wall, modifying a bathroom layout, or installing larger windows might alter the structure, fire safety requirements, or setback regulations of your property.
Starting without proper approvals can lead to stop-work orders, costly retrospective applications, or complications when refinancing or selling down the track. Some lenders will even withhold funding if proper permits aren’t in place.
Before applying for finance, we always recommend confirming whether your project requires a Development Application (DA) or a Complying Development Certificate (CDC). We also work closely with clients to ensure the necessary documentation is submitted upfront to avoid delays when finance is needed most.
3. Choosing the Cheapest Builder Instead of the Most Reliable One
Renovations are expensive. It’s only natural to gravitate towards the lowest quote. But choosing a builder solely based on price can end up being far more expensive in the long run.
Lower quotes often exclude key elements, rely on unqualified labour, or lack the appropriate insurance coverage. In worst-case scenarios, homeowners are left with incomplete or substandard work and need to pay a second contractor to fix it.
In today’s construction climate, where builder insolvencies have increased, it’s more important than ever to choose a licensed, experienced professional with a clear contract and transparent progress payment schedule. That’s something we help you structure into your home renovation finance plan, making sure funds are drawn down at the right stages so you stay protected every step of the way.
4. Financing the Renovation with the Wrong Loan Structure
Many renovators fund their projects with whatever’s easiest, such as redraws, credit cards, or personal loans. While quick, these options can come with high interest rates or insufficient borrowing capacity, leaving you financially stretched.
A smarter approach is to explore purpose-built renovation finance solutions, such as renovation loans, home loan top-ups, construction loans with progress payments, or equity release loans secured against the growing value of your home. Depending on your lender, you might even be eligible for interest-only repayments during the renovation phase, which can help keep your cash flow manageable during the renovation.
As mortgage brokers in Sunshine Coast, we assess your full financial picture to match you with the most suitable structure, not just the easiest option. The goal is to ensure your renovation is funded efficiently, affordably, and in a way that doesn’t strain your long-term financial health.
5. Changing Plans Midway Through the Build
Renovations are full of decisions, and it’s easy to second-guess yourself. However, making changes once work has begun can have a serious ripple effect. Even small alterations can require new permits, updated engineering drawings, changes in materials, or rescheduled trades.
Beyond the obvious costs, these changes also increase the risk of delays and miscommunication between teams. If your finance isn’t structured to accommodate variations, you could find yourself short on funds before the project is complete.
We often help clients build in a degree of flexibility when planning their renovation finance. That way, if plans evolve (as they often do), you have options without needing to scramble for a last-minute personal loan or credit card top-up.
6. Overcapitalising Without Understanding Property Value Limits
It’s easy to get carried away with high-end finishes and trendy upgrades, but spending more than your property is worth in its local market is a common and costly mistake.
For example, adding a $150,000 designer kitchen to a home in a suburb where $700,000 is the maximum sale price, you could risk overcapitalising. That means if you ever need to sell, you’re unlikely to recover your renovation investment.
This is where local property knowledge matters. We help clients run realistic property value comparisons and even coordinate with lenders and valuers to assess the likely post-renovation value. This ensures your loan amount aligns with both your renovation goals and the realities of your market.
7. Forgetting to Budget for Temporary Living Costs
If your renovation is extensive, chances are you won’t be able to live in the property while it’s underway. Between renting elsewhere, storing furniture, boarding pets, or doubling up on utility bills, these living costs can quietly chip away at your renovation budget.
Worse still, if there are construction delays, which are common due to weather or trade availability, you could end up paying for temporary accommodation longer than expected.
This is why renovation finance should always consider lifestyle costs, not just construction expenses. We help you look beyond the builder’s quote to ensure your funding covers all the practicalities that come with living through a renovation.
8. Not Having the Right Insurance During the Renovation
Your standard home insurance policy may not cover structural home renovations, especially if the works involve plumbing, electrical rewiring, or extensions. If something goes wrong, you could be left out-of-pocket for damages, theft, or injuries that occur on-site.
Some lenders also require specific types of insurance, such as contract works insurance or public liability cover, before releasing renovation funds. And if you’re taking on an owner-builder role, additional requirements may apply.
We flag these requirements early and help you factor them into your planning. That way, your project isn’t delayed due to missing documents, and you’re financially protected from start to finish.
Renovating with Confidence Starts with the Right Finance Strategy
A renovation should feel exciting, not stressful. But without the right financial structure in place, even the best-laid plans can unravel.
As local mortgage brokers in Sunshine Coast, we don’t just help you find a loan. We act as your renovation finance partner by guiding you through the process, comparing lenders and loan types, and making sure your funding aligns with both your renovation goals and your life circumstances.
We know what lenders look for. We understand which documents are needed and which questions you might not know to ask. And we’re here to help you approach your project with clarity, flexibility, and confidence.
Planning a Renovation? Let’s Talk Before You Build.
Whether you’re upgrading your kitchen or building an entirely new level, let’s structure your finances to keep your renovation project on track from start to finish.
Explore equity release and renovation loan options
Compare lenders who support staged construction funding
Get help planning for real-world costs, not just the builder’s quote.
Book your free consultation today and let’s talk about turning your plans into a property you love, without blowing your budget.
Frequently Asked Questions (FAQs)
Yes, in many cases you can access the equity you’ve built up in your home to help fund renovations. This is often done through a home loan top-up, a line of credit, or a refinance with cash out. If your property’s value has increased since you purchased it, or if you’ve paid down a decent portion of your mortgage, you may be eligible to borrow against that equity.
That said, your ability to do this depends on a few key factors, like your income, overall debt, credit history, and the lender’s assessment of your property. We can help you understand how much usable equity you might have and whether tapping into it is the most cost-effective way to finance your renovation plans.
In many cases, yes. This is especially true if your renovation involves structural changes, extensions or anything that affects your home’s layout or building compliance. Most lenders will require proof of council approval or planning permits before approving or releasing renovation finance, particularly for construction loans or large-scale projects.
If your works are considered minor or cosmetic (like painting or replacing kitchen cabinets), you might not need council approval, but it’s always worth double-checking with your local council or a town planner first. We’ll guide you through what lenders typically expect and make sure your finance application includes the right supporting documents to avoid unnecessary delays.
Lenders generally cover costs that are directly related to the building or structural improvements of your property. This could include things like extensions, bathroom or kitchen upgrades, roof repairs, or major plumbing and electrical work. Some may also cover associated costs such as architect fees, council permits or even temporary accommodation during construction, depending on the loan type.
However, lenders usually won’t fund luxury items (like pools or landscaping) unless they add value to the property, and some may not include soft furnishings or appliances. When you work with a mortgage broker, we help you understand exactly what’s covered, compare your options, and tailor your loan structure to your renovation goals.
It may be possible to increase your loan mid-project, but it’s not always straightforward. Lenders often require updated valuations, new documentation, and a reassessment of your financial position before approving additional funds. This can cause delays, especially if the renovation is already underway.
That’s why we encourage clients to build a realistic contingency buffer into their loan amount from the start. We’ll help you plan ahead, so you’re not caught short if something unexpected crops up during construction. If you do need extra funds later, we’ll also explore your options quickly to help avoid disruption to your build.
A construction loan can be a smart choice if your renovation is large-scale or structural, such as adding a new level, building an extension or knocking down walls. These loans work by releasing funds in stages (known as progress payments) as the renovation progresses, which helps you avoid paying interest on the full loan upfront.
However, they’re not always necessary for smaller cosmetic upgrades. In those cases, a loan top-up, refinance, or personalised home equity loan might suit you better. The right option depends on the size and type of your project, your current mortgage structure, and your financial goals. As your broker, we’ll walk you through the pros and cons of each path and help you choose the finance that fits best.
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