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Borrowing For Renovation – Cheap Options | Loans

Are you thinking of renovating your bathroom? Or have you already decided on tiles, hatches and appliances for your new dream kitchen? No matter how far you have come in planning, you need to think about how to finance the renovation.

Renovating is hardly a cheap deal and few have enough money in the savings account to be able to finance the renovation in cash. In this article, we therefore go through different financing options and how to go about making your renovation as cheap as possible.

Different financing options when renovating

Different financing options when renovating

Renovation Loans – Private Loans

An increasingly common way of financing the renovation is by taking out a renovation loan, which is basically the same as a regular private loan, and has several benefits. On the one hand you do not need to provide any security for the loan and on the other you can redeem the loan when you want at no extra cost. Today you can easily apply for private loans online and get answers quickly. If you apply for private loans via Good Finance, you also have 38 lenders compete for you as a customer, which pushes down interest rates and increases the chance of your renovation being as cheap as possible.

Pay in cash

If you have the opportunity, it is of course very good if you can finance your renovation in cash as it is always the cheapest in the long run since you do not pay any interest costs. In addition, you do not need to be taken out with the loan for a longer period. However, it is far from everyone who has so much money in the savings account and therefore most of the money lends to the renovation.

Extend existing home loans

Extend existing home loans

Another way to lend money to your renovation is to extend an existing home loan. Then you use the home as collateral for the loan. The big advantage of this type of financing is that you get a lower interest rate. However, keep in mind that the new repayment requirement that may have occurred may mean that you have to repay more on your home loan if you choose to increase the loan.

This may mean an increased monthly cost over and above the already increased interest costs due to the increased loan amount. In addition, the repayment requirement means that your home must not be mortgaged more than 85%, which means that there may not be room for you to take out a loan for your renovation.

Renovation on installment

Otherwise, the renovation can also be financed through the payment solutions offered by the merchants (eg IKEA, Kvik or Byggmax) or with their own credit card. However, these two loan solutions generally mean much higher effective interest rates (ie the total interest rate for the loan, including interest and additional fees) than home loans or private loans and should therefore be avoided.


For those who have the conditions, in the form of high income, building credit can also be a way of financing the renovation. This means that the bank pays the invoices that are sent to you and continuously charges and interest as long as the renovation is in progress. The big advantage is that you do not need to borrow more than the renovation actually costs and afterwards can choose which bank you want to convert your credit into a mortgage with better interest rates. This type of loan form is most common in major types of renovations.

Renovation loan or extended home loan?

Renovation loan or extended home loan?

A renovation is sometimes necessary and often a good investment that can increase the value of your home. Are you facing the renovation and realize that you will need to borrow money to be able to renovate, then the question is which loan form is best for you. What many people do not think is that it will usually be more expensive in the long run to finance the renovation by increasing the mortgage. This is because the mortgage rate is slower on home loans and you then pay interest over a longer period. If you are going to repay the loan in your home loan, you should therefore pay off as quickly as if you had taken out a private loan. Otherwise, it will be cheaper in the long run to take out a unsecured loan compared to increasing the mortgage.

An advantage of the private loan is also that you can repay the loan at any time without owing the bank any interest rate differential payment (a fee the bank charges for a mortgage loan if you pay off it early). Another advantage of a private loan instead of an extended home loan is that it is simpler and faster. Extending a home loan is a lengthy process that requires the bank to evaluate your current home loan and the opportunities to extend it. Applying for a private loan can be done quickly and easily, directly online and usually you get the same day response.