If you hold investments you can cash in or have the savings, cash is always your best option. Paying cash helps you avoid paying interest and you will not have to worry about loans, bank fees, or interest rates. 

This is great option if your renovation project is small and you don’t want to bear any financial risk.

BONUS TIP: Do not tie all your savings to the renovation - have an emergency fund for unexpected expenses such as a medical emergency or a car insurance excess.

This is one of the most common ways to fund renovations and is more ideal if you are looking to do a major renovation project. The equity in your home is the difference between the value of your house and the amount you owe on the mortgage. Although interest rates are lower compared to personal loans or credit card – the amount you can borrow is based on the equity in your home. Don’t forget that going with this option means you will end up with a bigger mortgage, increased repayments, and longer duration.

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Personal loans are a fast and convenient way to fund renovations because they are processed quickly. Once approved, the funds are deposited as a lump sum directly into your account. There are 2 types of personal loans: secured and unsecured. A secured loan lets you use an asset (such as a car) as collateral for the loan. This means there is less risk for the lender so interest rates on a secured loan are much lower compared to an unsecured loan.

Personal loan interest rates are extremely helpful with budgeting because they can be fixed for the duration the loan. A great option if you are looking for a simple yet cost-effective way to fund your dream renovation.  

Note: Interest rates on a personal loan are generally lower than credit cards, but higher than mortgages.

If you want something quick and easy, this might be the option for you. Low interest credit cards are easy to apply and be approved for. They are great for smaller projects and are also extremely convenient, especially if you are purchasing renovation products online. 

If you budget strategically, you can even finance a project without paying interest – but make sure you to stay up to date with your payments to avoid late payment fees, penalties, and interest.

This option is ideal for long-term projects. Using a line of credit gives you access to funds as you need them, while only charging you interest on the balance owed rather than the total loan amount. Although interest rates are generally higher compared to standard loans, using a line of credit gives you great flexibility to pay for the cost of materials and labour when needed.

If you want to minimise your interest and borrowing fees, I recommend exploring these methods to determine the best finance option for you. It will help you save thousands of dollars, and ultimately fast-track you to building your dream home.