South Africa
How to Finance a Home Renovation

How to finance your home renovation

Raise the market value of your home by refinancing your home loan and affordably fund a home renovation project.

Refinancing your home loan is a cost-effective way to finance a home renovation and increase the market value of your home. Here are two options to consider.

Renovating your much-loved family home can help realise your family’s ever-expanding dreams, while also increasing the market value of your home in the long run. But renovations can be costly, and not everyone has immediate access to the extra funds needed to make the desired alterations.

Ways to finance a home renovation

Fortunately, there are different ways to finance a home renovation, even if you don’t have the available cash. Banks nowadays allow you to extend your existing home loan and apply for further lending, giving you access to the available equity in your existing bond to pay for other expenses, like your home renovations.

Option 1: A re-advance on your existing home loan

  • Look at applying for a re-advance on your home loan if you’ve already paid a portion of your home loan’s total amount.
  • In doing so, you’ll be able to borrow all-or-part of your total home loan amount again.
  • And once your home loan balance reduces, you can apply for another re-advance.

Option 2: Apply for further lending

  • Another option is to take out a second loan, or further loan, on your property over and above your existing bond.
  • Further lending is one of the most cost-effective ways to finance your home alterations.
  • This can only be done if the additional amount you require exceeds your existing registered loan amount and the value of your existing property has increased since purchase.
  • Your bank will need to complete a new home valuation to establish your home’s present value.

Factor in additional costs

Note that additional costs, such as bond registration payments, conveyancing fees and property valuing costs, will incur.

And remember, as your home loan balance will increase due to the second loan, so will your monthly instalments. This amount will need to be recalculated by your bank to establish an all-encompassing single monthly repayment.

Your bank’s home loan calculator can help you work out what you can further afford over and above your current instalments.

All the necessary details and costs involved in applying for further lending can be found in your bank’s pricing guide and document checklist.

Next step

Visit our Home loans page to extend your existing home loan, or head to the property tips section of the Community to interact with other Standard Bank customers and bank consultants.