Will Renovations Increase Your Borrowing Power? A Teacher’s Guide
TL;DR Renovations primarily improve equity, valuation, and refinance options — they do not directly increase serviceability-based borrowing power, which is driven by income, expenses, and debts under APRA’s three per cent buffer. A higher valuation can reduce LVR, remove LMI, and unlock sharper pricing tiers, but only if the uplift is realistic against comparable sales […]
Renovation Loan Progress Payments Explained for Teacher Borrowers
TL;DR Progress payments are triggered by the nature of the works, not the budget. Structural renovations with fixed-price builder contracts and council approvals generally require staged drawdowns rather than lump-sum funding. Interest is charged only on drawn amounts during the build, but serviceability is assessed on the final principal-and-interest repayment once the loan converts at […]
How Teachers Can Finance a Knock-Down Rebuild
TL;DR Knock-down rebuilds are financed via construction loans, with funds drawn progressively across six stages from slab to completion, typically interest-only during the build and P&I afterwards. Equity in the existing property acts as the deposit, with lenders using an as-if-complete valuation to calculate LVR against the combined existing loan and build cost. Serviceability is […]
Construction Loan vs Renovation Loan for Teachers: Key Differences
TL;DR The choice between a renovation loan and a construction loan is driven by the nature of the works — structural, council-approved, builder-led projects require construction finance regardless of budget size. Renovation loans release funds as a lump sum with repayments from day one, while construction loans use staged drawdowns with interest-only charged on drawn […]