Fewer renos but for those redoing the bathroom? Personal loans give options

Recent data tells us that home renovations are down in Australia over March and April (as per the Australian Bureau of Statistics), which is hardly surprising given costs of just about everything are up.

Reno costs can certainly stack up, especially if you’re looking at top quality fixtures and fittings. But even if you go with a ‘budget’ approach to just one room, say a bathroom, you can be looking at $10,000-$15,000, according to trades and services site Service.com.au. 

In fact, it notes that the average bathroom renovation in Australia is about $19,500!

That’s more than expected perhaps, but also depends on the size of the space and of course the scope of changes - be they merely cosmetic or a Mario Bros-level leap into the plumbing. Realistically, most households like to power-up a couple of areas with a reno project and so the final score is likely to be much higher.

Okay, enough of the video game jokes. Just how can the average person fund something like a bathroom boost? Well, tapping into your savings might be one approach. At least by using saved money you won’t be faced with interest charged on borrowing. 

Meanwhile a lot of people rely on their credit cards to handle immediate reno costs, but doing this sensibly depends on what type of card you have, its credit limit and, rather importantly, the rate of interest you will face paying the bill off. Some interest rates are particularly high on cards at the moment (upwards of 23% p.a.), so this tactic isn’t for everyone.

That leaves personal loans - might one of these fit the bill?

Some basic advantages of a personal loan

Personal loans are quite versatile in that they can cover a large amount or even just part of your reno. The other thing is that repayments can typically be made weekly, fortnightly or even monthly, which helps any aspiring Cherie Barber plan ahead. 

Now back to the rate - it matters! Many personal loan lenders use risk-based pricing, which means the interest rate of your loan is based on your credit profile. So how you’ve managed your money to this point will likely play a role in the level of interest a lender is going to charge you. 

And you can negotiate - this isn’t the movies where you’re on the hook for whatever Robert De Niro’s character demands. 

As of early June, the average interest rate on an unsecured personal loan in the Mozo database was about 10% (8.79% for a secured multi-purpose loan). At a glance, there are also a number of good loans (as selected by our in-house experts) offering rates starting at 5 or 6% based on a loan amount of $10,000 over 5 years. Of course, there’s some fine print to be read here and each person’s application will differ, but those general numbers compare quite well.

So all up, if your credit history is in check, this type of simple reno funding is certainly worth a look. You will have some decisions to make about the rate and whether it will be fixed or variable, whether there are extra fees attached or not, and whether or not you are happy to take on the loan unsecured (that is without an asset put against the borrowed amount to help bring the cost down) or indeed a secured loan which would require you to put a car or a similar asset up against it. 

At the end of the day any form of borrowed money has to work for you. You need a budget and a plan, and to feel comfortable taking on any risks associated with paying the loan back. At Mozo, we do some of the hard work for you by comparing the top personal loans on the market.

So why not plunge into the deep green pipe of personal loans research (sorry!). Start below with a sampling of some of the best personal loans available.