If you've owned your home for a few years, there's a good chance it's worth more than you paid and you've paid down some of the loan. That difference is equity, and a cash-out refinance lets you borrow against it.
Renovations are one of the most common reasons we do this for clients.
How much equity can you access?
Most lenders let you borrow up to 80% of your property's value without LMI. Your usable equity is:
80% of the property value, minus what you owe
Example: - Property value: $1,000,000 - 80% of value: $800,000 - Current loan: $560,000 - Usable equity: $240,000
You don't have to borrow all of it, and you still need to show you can afford the larger loan.
What lenders need to see
For a cash-out refinance, lenders want to understand why you're borrowing.
- Up to a certain amount (often $50,000 to $100,000), many lenders accept a simple statement of purpose.
- Larger amounts usually need evidence, like builder quotes or a renovation contract.
For major renovations involving structural work, the lender may treat it as a construction loan, releasing money in stages.
Valuation: "as is" or "on completion"?
Some lenders will value your home "as if complete", meaning they lend based on the post-renovation value. This can increase how much you can borrow for big projects. It usually comes with progress payments and inspections.
Others only value it as it stands today. Which approach suits depends on the scope of your renovation.
Structuring the extra borrowing
Use a separate split. Put the renovation money in its own loan split. It keeps things clear and makes it easy to pay down faster.
Park it in an offset. If you won't spend all the money at once, keep it in an offset account so you're not paying interest on idle funds.
Consider the term. Adding $150,000 over 25 years at 6.49% costs about $1,012 a month. Over 30 years, it's about $947, but you'll pay more interest overall.
Renovations that add value (and those that don't)
From a lending point of view, the renovation doesn't need to add value. From a financial point of view, it helps if it does. Generally:
- Kitchens and bathrooms tend to return a good share of their cost
- Adding a bedroom or second living area can lift value significantly
- Pools and very personal finishes may not return their cost
Speak to a local agent before you spend if resale value matters to you.
Watch for falling values
With dwelling values down across Sydney and Melbourne in 2026, valuations may come in lower than you'd expect from last year's sales. Get a realistic estimate early, and don't commit to a builder until finance is approved.
Alternatives to a cash-out refinance
- Redraw from your existing loan, if you've made extra repayments
- Top-up with your current lender, which can be quicker than refinancing
- Construction loan for major structural work
- Personal loan for small jobs, though rates are much higher
Frequently asked questions
Can I get cash out to use for anything?
Lenders generally accept common purposes like renovations, investment, education or a car. Some restrict "unspecified" cash out above certain amounts.
Will my rate be higher for cash out?
Not usually, if the total loan stays under 80% LVR.
Is renovation interest tax deductible?
On your own home, no. On an investment property, the interest on money borrowed for improvements may be deductible, and the improvements may be depreciable. Ask your accountant.
Planning a renovation? Call Finfident on 02 6416 2142, or Call, Text or WhatsApp 0424 545 654. We'll work out how much equity you can access and the best way to structure it.
Want to know if this applies to you?
Talk it through with a Finfident broker. It's free and there's no obligation.
