Cash out refinance to renovate or upgrade
Put the equity you've built in your home to work on a renovation, an extension or your next move.
Reviewed by Anita Callaghan, Director and Principal Broker of Anita Finance, Credit Representative 557021.
Last updated .
Turning equity into your next project
Your equity is the difference between what your home is worth and what you still owe on it.
A cash out refinance increases your loan, and the extra funds go towards your plans.
That might be a new kitchen, an extension for a growing family, or the deposit on your next home.
What to weigh up
Lenders mortgage insurance is usually charged when you borrow more than 80% of the property's value, and it protects the lender. (Moneysmart)
Keeping the new loan at or under 80% of your home's value is often the sweet spot.
If you move lenders to access your equity, the usual switching costs apply, such as discharge and application fees. (Moneysmart)
For money you might need later, a redraw facility gives you access to extra repayments you've made, depending on your loan terms. (Moneysmart)
Anita sets these out side by side, so the structure you choose matches the project.
From idea to funds in place
Your plans
What you'd like to do, what it's likely to cost, and when you'll need the money.
Your equity
An estimate of your home's value and how much you could access while keeping your costs down.
The right structure
A top-up, a new split, a switch to another lender, or a construction loan for bigger builds.
Funds ready
Anita handles the application through to settlement, so the money is there when your builder is.
Equity as your next deposit
Your equity can also become the deposit on your next home or an investment property.
If an investment is on the cards, see investment property loans for how Anita structures the next purchase.
Cash out refinance questions
What is a cash out refinance?
It's a refinance where the new loan is larger than your current one, so you receive the difference to use for something else.
Most people use it to renovate, extend, or put a deposit towards their next home or an investment.
How much equity can I access?
Your equity is the difference between what your home is worth and what you owe.
Many borrowers aim to keep the new loan at or under 80% of the home's value, because lenders mortgage insurance usually applies above that.
Do I need to tell the lender what the money is for?
Yes, lenders ask what the extra funds are for, and some purposes suit some lenders better than others.
Anita helps identify lenders that may suit your plans before anything is submitted.
Should I stay with my current lender or switch?
Sometimes the simplest option is increasing your loan with the lender you already have.
Anita compares that with what other lenders would offer, including the cost of switching, so you can choose with the numbers in front of you.
Is a cash out refinance right for a major renovation?
For smaller projects it often is, and for a major build a construction loan with progress payments can suit better.
Anita can talk you through both once she knows the scope of your plans.
Other ways Anita can help
Investment property loans
The next property structured with the one after it in mind.
Read moreRefinance your home loan
Your current loan compared against today's market, so you can see whether moving is worth it for you.
Read moreDebt consolidation refinance
Credit cards, car loans and personal loans brought into your home loan, with the full cost laid out.
Read moreAbout Anita
Bank trained, now broking for families and business owners across Sydney and Australia.
Meet AnitaPlan your next project.
Tell Anita what you're planning and roughly what your home is worth, and she'll come back to you with how to fund it.
The first conversation usually takes about 20 minutes, and it gives you a clearer picture of your options.
Monday to Friday, and after hours when needed.