Compare personal loan vs home equity drawdown side by side. See repayments, total interest, and total cost for each option to find the right way to finance your renovation.
| Personal Loan | Equity Drawdown | |
|---|---|---|
| Repayment | $1,037.92 /month | $435.55 /month |
| Total interest | $12,275 | $28,400 |
| Total cost | $62,275 | $78,400 |
| Term | 5 years | 15 years |
| Rate | 9% p.a. | 6.5% p.a. |
| Payments | 60 | 180 |
The personal loan saves you $16,125 in total interest, but the equity drawdown has lower monthly repayments of $602.36 less per month.
| Personal Loan | Equity Drawdown | |
|---|---|---|
| Security required | None | Property |
| Approval speed | Days | Weeks |
| Risk to property | No property risk | Property at risk |
| Typical term | 1-7 years | 5-30 years |
For renovations under $30,000 where speed matters, a personal loan avoids the property valuation process and keeps your home clear of additional security.
For major renovations above $50,000, a home equity drawdown can save thousands in interest thanks to lower rates, even though the total interest over the longer term may be higher.
The equity drawdown option spreads payments over a longer term, resulting in lower monthly repayments. Compare the monthly figures side by side to find a balance that works for your budget.
If you prefer not to put your home on the line, a personal loan keeps the borrowing separate from your mortgage. The trade-off is a higher interest rate and shorter repayment window.
Lenders assess your ability to service the loan based on your income, existing debts, and living expenses. They want to see that repayments are affordable for you.
For an equity drawdown, the lender will value your property and assess how much equity you have above your existing mortgage. Most lenders allow you to borrow up to 80% of the property value minus your outstanding balance.
Your credit score and repayment history influence the rate you are offered. A stronger credit history generally means access to more competitive rates on both personal loans and equity products.
Some lenders want to see quotes or a renovation plan, especially for larger amounts. Construction-specific finance may require council-approved plans and a licensed builder.
See personal loan rates from 50+ lenders and find an option that works for your project.
Subject to lender approval, terms and conditions apply.
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Personal loans (unsecured, fast approval), home equity loans (secured against your property, lower rate), or construction-specific finance for major builds. This calculator compares the two most common options: personal loan and home equity drawdown.
Home equity loans offer lower rates (typically 5-7%) but use your house as security and take longer to arrange. Personal loans are faster (often 1-3 days) at higher rates (7-14%). The right choice depends on the renovation cost, your risk tolerance, and how quickly you need the funds.
Typical range: $15,000-$45,000 depending on scope. Budget renovations run $15,000-$25,000. Mid-range: $25,000-$35,000. Premium kitchens: $35,000-$50,000 and above.
Yes, non-bank lenders offer renovation finance for applicants with impaired credit, typically at higher rates. Your options may be more limited, and you are unlikely to qualify for a home equity drawdown without a strong credit history.
Kitchen and bathroom renovations typically return 50-80% of their cost in increased property value. Structural additions (extra bedroom, granny flat) often return more. The return depends on the property market, the quality of the work, and whether the renovation addresses a genuine shortcoming.
Construction-specific finance offers staged drawdowns tied to builder milestones. Personal loans disburse the full amount upfront. Home equity lines of credit allow you to draw funds as needed during the renovation.
When you borrow against your property, the lender holds your home as security. If you cannot make repayments, your property is at risk. A personal loan has no property security, so your home is not directly at risk, though the interest rate is higher.
Personal loans can be approved in 1-3 business days. Home equity loans or mortgage top-ups typically take 2-4 weeks because the lender needs a property valuation and a more detailed assessment of your financial position.
Results are estimates only and should not be relied upon for financial decisions. Actual renovation loan repayments will depend on the lender, your credit profile, and the specific terms offered. Interest rates used are for illustration purposes only and may not reflect current market rates.
Subject to lender approval, terms and conditions apply.
This calculator is general information only and is not financial advice.