Australians have been pouring money into their homes during COVID-19, sparking a renovation boom.
In the past 12 months, owner-occupiers took out $4.38 billion in loans to fund alterations, additions, repairs, and rebuilds.
In August alone, owner-occupiers took out a huge $500 million in loans.
There has been a 143 per cent increase compared to last year in renovation loans.
David Stableford and his wife bought their Balgowlah home, in Sydney’s Northern Beaches, two years ago.
The pair has already finished one major renovation and now they’re finishing off a new bathroom.
“Investing in our own property was the obvious thing to do. We bought the worst house on the best street so we were always going to renovate,” Mr Stableford said.
James Algar, from Mortgage Choice, said many Australians are looking to renovate their homes.
“I’d probably say it’s up by 100 per cent, the kind of clients that are looking to do renovations where they would have more traditionally looked at moving or upgrading rather than embark on a major project,” Mr Algar said.
Not only is there a renovation boom, but house prices have also increased meaning there is higher equity.
Higher equity combined with lower interest rates has made it easier than ever to fund renovations.
A home buyer who bought a median-priced property in September 2019 with a 20 per cent deposit, paying principal and interest, could potentially draw $330,000 while still retaining their 80 per cent loan to value ratio.
Sally Tindall, from RateCity, said if someone has owned their home for two years or more is likely to be sitting on a “growing mountain of equity.”
“You might not realise just how much of your home you actually own now,” she said.
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Mr Stableford said he pulled out equity for the renovations but his payments had remained the same as his previous mortgage.
“So we pulled out a few hundred thousand in equity, so it was a no brainer,” he said.
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