What Are The Requirements For A Home Improvement Loan?

Eligibility Criteria For Home Improvement Loans

A home improvement loan is a personal loan that provides you with a sum of money to use for renovating, repairing, or extending your home. These home improvements can enhance the safety and functionality of your property – and may even boost its value.

For a successful application, you’ll need to meet strict eligibility requirements. 

Your Credit Score

Your credit score isn’t the only deciding factor in your loan application, but it plays a big part. Lenders see stronger credit scores as less risk, so a good credit history may increase your chances of approval. 

Income Requirements

One of the main conditions of taking out a personal loan, whether it’s a home improvement loan, holiday loan or even an emergency loan, is that you agree to pay the loan back in regular, consistent instalments. 

For that, you need to show proof of a steady income. Most lenders will require you to be in either part-time or full-time employment and show you’ve received consistent income for the past 90 days. 

Citizenship or Residency

To apply for a personal loan in Australia,  most lenders will require you to show proof of Australian citizenship or that you have Permanent Residency status in the country. You’ll also need to show proof of a fixed address.

Active Contact Information and Bank Account

Contact details and bank account information are essential for a smooth loan application process. 

Under the National Consumer Protection Act 2009, a loan provider must be able to determine that a loan product is “not unsuitable” for a prospective borrower. One of the factors in coming to that decision is whether the lender can communicate easily with the applicant. Providing accurate contact information ensures we can easily reach you with important updates or requests.

Your bank account details allow lenders to verify your income and financial standing, so they can ensure the loan will fit your needs and assess your application quickly and confidently.

Collateral For Security

To get a secured loan, you’ll need to offer a vehicle as security. This gives the lender an asset to sell to recoup costs if you fail to make repayments. 

Understanding Home Improvement Loans

Personal loans for home improvements come in a variety of options, so it’s worth understanding what’s available before you start. Knowing your choices helps you pick the loan that best fits your renovation plans and budget.   

Secured vs Unsecured Loans

A secured loan for home improvements offers funds to help you fund your property upgrades. The key requirement is that you provide your vehicle as collateral for the financing. If you don’t uphold your loan repayment obligations, your lender may repossess your vehicle to recoup the costs. 

At Trusty Finance, we exclusively offer secured loans up to $5,000. Understanding how they differ from unsecured loans can help you make an informed choice. 

Unlike a secured loan, an unsecured loan does not require collateral. However, it does sometimes come with a higher interest rate. And because the unsecured loan presents a higher risk to the lender, they may set a lower borrowing limit.

Essential Documents You Need For Your Loan Application

When you apply for a home improvement loan, or any type of personal loan, you will need to provide specific information about yourself. This information will determine your eligibility as a borrower and will be instrumental to the outcome of your application. 

Have This Information With You 

As part of the application process, you will likely be asked to provide the following information:

• Bank account details
• Proof of a consistent income, such as recent consecutive payslips
• Current and valid identification in your name (e.g. passport or driver’s licence)
• Car registration certificate as proof of vehicle ownership
• Employment details
• Residential address and contact information

Making sure you have these documents close at hand when you’re ready to apply online will help ensure a smooth and stress-free application process. It also helps us make a quicker decision on your loan application, so you don’t have to wait longer than necessary. 

Final Tips For A Favourable Home Improvement Loan Application

Getting a personal loan for home renovations usually takes a bit of preparation. Focusing on your financial situation and clearly defining your renovation plans can improve your chances of being approved.

Improving Your Credit Score

As mentioned earlier, a strong credit score plays a big role in your loan application. If your credit report shows a lower score, you can improve it by consistently paying bills on time and keeping your credit utilisation low. 

A higher score shows lenders that you’re less of a borrowing risk, which can lead to a better chance of approval. 

Minimise Your Existing Debt

Lenders may also consider your existing debt-to-income ratio (DTI) when they assess your loan application. 

Your DTI tells lenders whether you can comfortably manage new debt alongside what you already owe. Your existing debt could include home or car loans, credit cards, or student debts. 

Here’s how to calculate your DTI:

Total Monthly Debt Payments / Gross Monthly Income * 100 = DTI

Reducing your debts and lowering your debt-to-income ratio shows lenders you’re managing your finances well. 

Choosing the Right Home Improvement Project

One of the biggest benefits of home improvements, aside from improving functionality and safety, is that they can improve the resale value of your property. In many cases, lenders look favourably on renovations that either focus on essential structural repairs, or improve energy efficiency, as they tend to increase the overall value of your home. 

Breathe New Life Into Your Home With Trusty Finance

Whether you’re carrying out much-needed repairs and maintenance, updating your property with renovations, or finally getting around to those landscaping and outdoor upgrades you’ve had on your to-do list, Trusty Finance can help you make it all happen with our home improvement personal loans. 

You can borrow up to $5000 to breathe new life into your home. Take advantage of our user-friendly online application process and unlock the funds you need to finally create the house you’ve always wanted. 

FAQ

Who is eligible for a home renovation loan? 

Trusty Finance assesses each loan application based on its merits, but basic eligibility criteria does apply. You must be at least 18 years of age and be employed with evidence of at least 90 days of consistent income. You must be an Australian citizen or a permanent resident of the country with a fixed residential address. 

Applicants must be able to provide an active email address and phone number for communication purposes, and must also have an Australian bank account in their name. And, as Trusty Finance loans are secured, you must own a motor vehicle that is registered in your name.

What documentation must I supply to apply for a home improvement loan? 

When you apply for a personal loan for home renovations or repairs, you will need to show proof of income, valid identification in your name, like a passport or driver’s licence, and a certificate of registration that shows ownership of a motor vehicle in your name. You will also need to provide your bank account and contact details, and information about your employer. 

Is there a penalty for paying off my home improvement loan early?

At Trusty Finance, there’s no penalty for paying off your home improvement loan early. We offer flexible repayment options and no extra fees for early repayment. However, some lenders may have early repayment fees or break costs, so it’s a good idea to check the details of your loan contract or speak with your lender about any potential charges.