One of the great things about a mortgage with free redraw is the ability to pay off extra over a period of time and then use those savings for something major.
Using Existing Redraw for Renovation
Home renovation and improvements are often a suitable use for those funds, especially given the fact that they should result in your home being more valuable as well.
However, there are some cautions. If you have an existing line of credit secured against your home and you want to use this for a major structural renovation on the home – you really should first speak to your lender. Let your lender know what you intend to do and get their okay. More than likely the terms of your loan agreement will stipulate that you must not carry out structural changes to your home without your lender’s consent.
At the end of the day, it is the property that your lender holds as security for the loan. So they have every right to be particular as to what is done to the property. It may be that your lender will be fine to lend you the money for the renovation, however they may well insist on the loan being a construction loan.
This is to protect against the situation where you run out of money half way through the construction process. The lender does not want to be left holding a half completed home. See my video on renovating and construction loans for more information on this topic.
To get a full picture of all that’s involved, grab a copy of our free eBook, Renovation or Relocation. It goes through the issues involved and helps you work through what you really need. If you have major work to be done, perhaps the simplest thing is to just give us a call here at State Custodians Mortgage Company. We can help you get into a suitable loan to help you accomplish your renovation goals. Phone 13 72 62.