Renovate Now or Later? What to Know Before You Choose Your Mortgage Loan

Have you ever fallen in love with a home and your mind is filled with pictures of the stunning renovations you’d like to do? You’re not alone. It’s common to buy a house knowing renovations are on the horizon. But here’s the million-dollar question: should you borrow extra with your initial mortgage loan to fund those changes now? Or should you settle in first, get to know the property and renovate later?

As experienced mortgage loan providers, we understand how tempting it is to tackle everything straight away. But we also know that rushing into a major renovation can lead to unnecessary debt and future regret. The right answer? It depends. Let’s unpack the pros and cons of both strategies, and what property professionals advise.

Renovating Immediately: What Are the Pros?

Borrowing extra capital upfront can streamline your project and remove the hassle of applying for finance twice. Many buyers opt for this approach if the property needs urgent structural work, like replacing a roof, rewiring old electrical systems or upgrading plumbing. These are often “non-negotiables” that need to be addressed before the home is liveable or insurable.

Professionals also point out that combining renovation funding with your initial mortgage may save on costs. You’ll only pay one set of loan establishment fees, and you could benefit from today’s interest rate before future market shifts. In fact, the RBA cash rate increased 12 times between May 2022 and November 2023, impacting borrowing costs across Australia.

If you already have a clear renovation plan, this approach can be efficient and cost-effective. It’s particularly useful for buyers with fixed timelines, such as:

  • Young families needing extra bedrooms ready before moving in.
  • Investors planning to lease the property at a higher rental return.
  • Properties within estates that need urgent renovations to meet Homeowner Association rules.

The Downsides of Borrowing for Renovations Upfront

There are risks. Renovating a home you’ve never lived in can result in costly misjudgements. What you think needs changing now might feel less important after six months of living in the space.

Many architects and interior designers recommend waiting. According to The Design Files, living in a home first helps you understand how the light moves, which areas feel cramped and how your lifestyle fits the layout.

From a financial perspective, you’ll also pay interest on the full loan amount from day one, even if renovation funds are unused for months. And if your budget gets blown out mid-project (which happens more often than we’d like), you may need to reapply for top-up loans later anyway.

Another key consideration is valuation. If you overcapitalise too early, investing more into the property than the neighbourhood can support, you might not recoup the costs when it comes time to sell or refinance.

Living In First, Then Renovating: Why Many Experts Recommend It

The "renovate later" crowd has strong arguments. This method lets you gather quotes from builders and trades while you live in the home, creating a renovation plan that’s based on experience, not assumption. You also get time to recover financially after the initial purchase before taking on extra debt.

Lifestyle plays a big role. Perhaps you thought you’d need a bigger kitchen, but realise outdoor living space matters more. Or you planned to knock down walls only to find the current flow works well after all.

Waiting also allows time for planning approvals or design revisions. You can meet with architects, submit DA applications and save up for features that may not have fit into your initial loan. Importantly, you stay in control of the process, making well-informed decisions over rushed ones.

Taking a staged approach may also help if you’re eligible for construction loans or refinancing packages with more favourable terms down the line. Mortgage loan providers often advise this route for buyers who are uncertain about their long-term plans or who may want to stagger costs.

The Middle Ground: Conditional Renovation Loans

Some buyers choose a hybrid path, borrowing a modest amount extra for essential fixes and waiting to fund cosmetic updates later. This keeps repayments manageable while allowing flexibility.

Lenders can structure your loan in a way that segments renovation funds, sometimes through offset accounts or construction drawdowns. It’s important to work with mortgage loan providers who understand this flexibility and can customise your loan to fit your goals.

This approach is especially useful if you’re purchasing an older property with quirks that might surprise you later. Having some capital on standby without using it all at once can help you adapt without financial stress.

What We Recommend

In our experience, the best decision comes down to planning and timing. If the renovations are structural, safety-related or affect your insurance, it’s worth including them in your initial mortgage loan. But if the updates are more about aesthetics, lifestyle, or “nice-to-haves,” it may be wiser to wait.

Before you decide, talk to a builder, a financial advisor and an experienced mortgage loan provider. Together, we can map out what’s realistic and sustainable. The right loan isn’t just about approval - it’s about creating financial freedom for what comes next.

Ask our mortgage loan providers team about renovation loan options that fit.