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Can I borrow extra at purchase to fund the renovations?
Bayley Clarke · Mortgage broker on the road · Last checked 3 September 2026 · 4 min read
The short answer
It depends on whether you already own property with equity available, and whether you're using a guarantor to support the purchase. First home buyers under the 5% scheme: no, the lenders cap you at 95% of the purchase price.
If you've got a deposit set aside and a guarantor, the guarantor funds the entire purchase and your cash becomes the renovation budget. If you already own with equity, we can borrow above the purchase price and earmark the extra for the work. Each bank has its own limits on that, which is the part I sort out.
The two minute version. The rest of this page is the detail underneath it.
First home buyer on the scheme: the answer is no
When people ask me this, it's often first home buyers we're putting under the 5% scheme, and the lenders will not let you borrow any more than 95% of the purchase price. So no, you will not be able to borrow additional money for renovations. The loan is capped at the property, full stop.
That's not a lender being difficult. The scheme guarantees a loan against a home, not a home plus a kitchen. If the place needs work, the work comes out of savings after settlement, or it waits.
Cash plus a guarantor: swap what the cash is for
If you have a deposit set aside and you have access to a guarantor, a way to fund renovations immediately is to use the guarantor to fund the entire purchase. The bank lends the full price against your property plus your parents' equity, and that way your cash becomes your renovation budget.
It's the same money doing a different job. Instead of $40k going in as deposit and the kitchen waiting three years, the $40k does the kitchen and the guarantee covers the deposit until the loan gets to 80% of value. How that works and when the guarantor comes off is on how a guarantor loan works.
Already own: equity, within the bank's rules
If you already own property and there's equity available in there, we can look to borrow above and beyond the purchase price of your next property and say, this extra money is for renovations. Yes, we can do that too. The extra usually sits as its own split so you can see it and pay it down.
Here's where the banks differ. Most will release renovation money without evidence up to a cap, and the cap ranges from no limit at all down to about a hundred thousand at the tightest lenders. Above that, or above 80% of the property's value, they want quotes or a builder's contract. A few restrict it to non-structural work, meaning kitchens, bathrooms, floors and paint, and push anything structural into a construction loan. And the whole amount has to sit inside the lender's maximum loan-to-value ratio, which for cash-out is often lower than for a straight purchase. The pull equity out for a reno page goes through the non-structural rule in detail.
The honest bit: it's a scenario conversation
There isn't a yes or no here. It's what if we do this, what if we do that. Whether you fit the scheme case, the guarantor case or the equity case decides the answer, and inside the equity case the bank you choose decides how much and on what evidence.
That's what we go through on the phone. Five minutes of your situation is worth more than any general answer, this page included.
Buying a place that needs work?
A 30 minute call. I tell you which of the three cases you're in, what the renovation money looks like as a number, and whether it's a split, a guarantor structure or a wait.
No cost to you. The bank pays me when a loan settles. ยท How I get paid
Next question
Do I need to save a full 20% deposit again for my next home?The equity case, from the deposit side.
Related answers
Should I combine my home loans into one, or keep them separate? Can I buy a block of land now and worry about the build later? Can I pull equity out for a reno?Not your question? Book a call and ask it, or call 0437 189 939.