Australians are increasingly opting for personal loans to fund home improvements, according to a new study by digital lender MONEYME.
The report reveals that residents in Craigieburn, Victoria, lead the country in small home renovation loans, while New South Wales ranks highest in both loan volume and value.
The trend reflects a growing preference among homeowners to upgrade their properties, spurred by high housing costs and a strong demand for home improvements.
MONEYME’s data shows that Craigieburn in Victoria has the highest number of small renovation loans, with the average loan value around $22,400.
New South Wales, however, surpasses all states in both the total number of loans and the highest average loan value, standing at $22,640.
ABS supports these findings, noting that NSW also leads in renovation loan activity, with a significant increase in average loan amounts for more extensive projects, now averaging $225,664 – a 9% jump over the past year.
Richard Bray (pictured above), chief sales and marketing officer at MONEYME, attributed the rise in renovation loans to Australians purchasing affordable homes with the intention of upgrading.
“We have seen an increase in Australians taking out personal loans toward making home improvements,” Bray said.
He added that many buyers who can’t afford their ideal home upfront are choosing fixer-uppers and gradually adding value through renovations like kitchen updates, bathroom improvements, and landscaping.
Bray also said that outer suburbs, particularly in Victoria, are hotspots for these loans. Suburbs such as Point Cook and Hoppers Crossing are among the top three in Australia for small renovation loans, benefiting from their affordability and access to metropolitan amenities.
The Top Australian Suburbs Requesting a Personal Loan for a Home Renovation
Average Home Renovation Loan Size Requested and Demand by State
The choice to renovate instead of moving is increasingly popular, Bray noted, as rising property prices make moving cost-prohibitive for many.
“Rising property prices might make it harder for people who want to move home. The next best choice is to renovate their own homes,” he said.
He added that personal loans, which can be approved the same day for amounts up to $50,000, offer an immediate solution for homeowners eager to start renovations.
With mortgage rates remaining high, many Australians are turning to personal loans for renovation funding instead of relying on credit cards or savings.
Bray pointed out that personal loans provide longer repayment terms, lower interest rates, and predictable monthly payments.
“It can take years to save for a home renovation project, and credit cards can incur high interest charges,” he said.
Bray recommended comparing loan options, such as fixed or variable rates with no exit fees, and considering lenders who might offer lower rates for homeowners with assets and good credit histories.
Bray advised homeowners to plan their renovation budgets carefully before taking out a loan.
“Before taking out a personal loan for home improvements, ensure you have calculated all the costs,” the MONEYME leader said, listing labour, materials, permits, and other fees as key factors.
Using online calculators to assess loan affordability and repayment schedules can also help ensure monthly payments fit within homeowners’ budgets, making the renovation process smoother and more manageable.
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