Renovating your home can be exciting—and homeowners often wonder if it's possible to include renovation costs within their mortgage. Here’s an informed overview of how it works in New Zealand.

Borrowing Through Your Existing Mortgage

Many homeowners choose to top up their current mortgage to fund renovations. Banks typically allow this when there’s sufficient equity—meaning the loan balance is well below the home's value. BNZ, for example, notes that topping up is a common way to cover renovation costs, subject to an assessment of affordability and equity.

ANZ also offers builder-focused mortgage packages that allow funds to be drawn as renovations progress. Their Construction Coach assists borrowers through planning, consent, and staged disbursement .

Separate Home Renovation Loans

Some borrowers may opt for a standalone renovation loan. These are structured more like personal loans, often capped at lower amounts (e.g., NZ$50,000), depending on the borrower’s credit profile. Interest rates tend to be significantly higher (typically 11–14%) compared with mortgage rates, which currently average 6–7%.

Equity-Linked Overdraft Facilities

Banks like Westpac may offer overdraft-style facilities linked to the home loan. If you have equity, repayments are interest-only and funds can be used flexibly as needed—such as paying contractors in stages.

What Lenders Will Look For

Regardless of financing route, lenders generally require:

• Accurate quotes with conservative cost estimates (adding ~15% to your builder's estimate)
  
  
• Professional reports—Quantity Surveyor estimates or bank-ordered valuations—to assess lending security.
  
  
• Renovation consent, where structural work is involved, must be confirmed before final approval, in accordance with your local council’s requirements.
  
  

These ensure both borrower and lender remain protected.

Considerations for Kāinga Ora and First-Home Buyers

If you’re using a Kāinga Ora First Home Loan, there may be conditions around maintenance and repairs. Typically, minor renovations must cost under NZ$10,000 and be completed within six months.

For Māori homebuyers on whenua Māori, the Kāinga Whenua Loan can cover house renovations, buys, or relocations—secured just on the dwelling, not land.

Weighing Your Options

Many homeowners successfully finance renovations through mortgage top-ups, overdraft facilities, or stand-alone loans. Banks will assess factors like equity, renovation purpose, and security before approving.

If you're considering financing improvements, gathering quotes and professional valuations early is wise. Discuss options with your bank or mortgage adviser to explore what suits your situation—whether that’s integrating costs into your mortgage or arranging separate finance.

This article is for informational purposes only and does not constitute financial advice. Always consult a licensed financial adviser or mortgage professional before making lending decisions.