Australian homeowners are reluctant to renovate because they feel refinancing their mortgage is too difficult, according to a new consumer survey.
A survey of more than 1,000 homeowners commissioned by finder.com.au found that 90% of Aussie homeowners are have never refinanced their home to renovate. Out of those who haven’t refinanced to renovate their home, only 17% would consider it.
Almost three in four (73%) think it would be difficult to refinance their mortgage to renovate their home, with 14% saying they find refinancing a mortgage “overwhelming”.
Michelle Hutchison, money expert at finder.com.au, says the value of home loans being financed for alterations and additions has almost halved compared to a decade ago.
“Many borrowers are dodging the idea of refinancing their home to renovate because they just don’t know where to start,” she said.
“It’s not surprising when our survey found that most people are in the dark with the costs and value a reno will add."
In fact, the survey shows that one in three homeowners who haven’t refinanced to renovate are unsure how much it would cost, if they can afford to, how much value it would add or where to start.
Even if they have refinanced to renovate, 93% still have concerns whether they could afford to, what their mortgage repayments would be and how much value it would add.
With Australian capital city property prices rising 1.3% in January – and 8% in the 12 months to January – brokers have a real opportunity to educate homeowners about refinancing to renovate.
Speaking about the Westpac Renovation Report Australian Broker
reported on recently, Westpac’s general manager for broker distribution Tony MacRae says brokers should be getting out there and helping homeowners to refinance to renovate.
“Over the last decade renovating has become a more viable option for home owners to have the home that they truly desire,” he said.
“While many people perceive timelines and budgets as some of the most challenging aspects of a renovation, these can actually be simplified during the planning process. Talking to a mortgage broker about refinancing options before making any hard and fast decisions is a smart move. [Brokers] can ensure that there is enough equity in the home to comfortably finance any home improvements.”