Australian homeowners are dodging renovations funded by the equity in their home because it’s just too difficult, according to a new study.
The finder.com.au survey of more than 1,000 homeowners found that 90 per cent have never refinanced their home to renovate.
Of those who have not refinanced to renovate their home, just 17 percent would consider it.
Almost three in four (73 percent) of homeowners think it would be difficult to refinance their mortgage to renovate their home, according to the survey, which found 14 per cent find the idea overwhelming, with women slightly more overwhelmed than men.
Finder.com.au spokesperson Michelle Hutchison said she is not surprised by the findings, given the decline in borrowers financing home loans for alterations and additions.
“Many borrowers are dodging the idea of refinancing their home to renovate because they just don’t know where to start,” she said.
“We found that the value of home loans being financed for alterations and additions averaged $352 million per month for the past five years [since January 2010].
“It has almost halved compared to over a decade ago, hitting a peak of almost $640 million in one month in 2003.
“It’s not surprising when our survey found that most people are in the dark with the costs and value a reno will add."
The survey found that more than one in three homeowners who have not refinanced to renovate are unsure how much it would cost, whether they can afford to, how much value it would add or where to start.
Out of those who have refinanced to renovate, 93 per cent had concerns about whether they could afford to, what their mortgage repayments would be while their biggest concern was how much value it would add.
More than two in five homeowners (42 per cent) are worried about rising interest rates, since unlocking equity to renovate means borrowers will have a bigger mortgage with higher repayments.
"The problem with refinancing to renovate is that every household is different. Everyone has different financial situations, mortgage sizes, equity and work needing or wanting to be completed. The amount of money people want to spend can also vary significantly,” Ms Hutchinson said.