The easiest way to use equity for renovations

Refinancing to release equity allows you to increase your loan amount and withdraw the difference in cash to fund renovation work.

You don't need to apply for a separate product or move lenders, though some lawyers choose to switch if another lender offers a lower rate or more flexible terms. The mechanics are the same as a standard home loan refinance, except the new loan amount is higher than your current balance. The difference is paid to you at settlement, and you can use it for any purpose, including renovating your house.

For litigation lawyers working toward partnership or managing variable billing structures, this approach keeps capital tied up in other assets or investments intact while using property appreciation that's already occurred. The cost is an increase in loan repayments and a higher loan to value ratio, but the financing rate is typically lower than personal loans or credit lines.

How much equity can you access through refinancing

Most lenders will allow you to borrow up to 80% of your property's current value without incurring lenders mortgage insurance.

Consider a lawyer who purchased a property several years ago for $750,000 with a 10% deposit. The current loan balance sits at $620,000, and the property is now valued at $900,000. At 80% LVR, the maximum loan amount would be $720,000, which means $100,000 in available equity after clearing the existing debt. That amount can be withdrawn as cash at settlement and directed toward renovation costs.

If you're willing to pay lenders mortgage insurance, some lenders allow borrowing up to 90% or even 95% of the property value, though this increases both the upfront cost and the ongoing repayment amount. For lawyers who qualify for LMI waivers, the 90% threshold becomes more viable without the additional premium.

Renovation costs versus available equity

Your available equity needs to cover the full scope of work, including materials, labour, council fees, and a contingency margin.

Litigation lawyers often underestimate the gap between initial quotes and final invoices, particularly when structural changes or compliance upgrades are involved. A kitchen and bathroom renovation quoted at $80,000 can easily reach $95,000 once demolition reveals outdated plumbing or electrical work that doesn't meet current standards. If your equity release is calculated to the dollar based on the original quote, you'll need to find the shortfall elsewhere or scale back the work midway through.

In a scenario like this, a lawyer with $120,000 in available equity might allocate $100,000 to the renovation itself and retain $20,000 as a buffer. The buffer accounts for variation costs, delays, or additional work that becomes necessary once walls are opened. It also avoids the need to pause work while arranging alternative funding, which can add weeks to a project timeline and increase holding costs if the property is temporarily uninhabitable.

Refinancing for renovation versus a construction loan

A refinance for equity release pays out the full amount at settlement, while a construction loan disburses funds in stages as work progresses.

For renovation projects where the scope is defined and the contractor is ready to start, a lump sum release through refinancing is more direct. You receive the funds upfront, pay the contractor according to your agreed schedule, and manage the project without needing the lender to inspect and approve each drawdown. This works well for cosmetic upgrades, kitchen replacements, or bathroom refits where the work is completed within a few months.

For larger structural projects that involve council approval, multiple trade contractors, and staged completion over six months or more, a construction loan may provide more control. The lender holds the funds and releases them as each stage is verified, which reduces the risk of paying a contractor in full before the work is finished. The downside is the administrative overhead and the need to coordinate inspections with your lender's valuer at each stage.

How refinancing affects your loan structure

Refinancing to release equity resets your loan term unless you specify otherwise.

If your current loan has 22 years remaining and you refinance without requesting a shorter term, the new loan will typically default to a 30-year term. Your monthly repayment may appear manageable, but you'll pay more interest over the life of the loan and delay the point at which the property is unencumbered. For litigation lawyers in their late 30s or early 40s planning to reduce work intensity closer to 60, extending the loan term can push repayments into a period when income may be less predictable.

You can request that the new loan match your remaining term or even shorten it if cash flow allows. A lawyer with $720,000 borrowed over 22 years at current variable rates will have higher monthly repayments than the same amount over 30 years, but the total interest cost will be lower and the loan will be cleared before retirement. Your broker can model both scenarios and show the trade-off between repayment size and total cost.

Tax treatment of equity used for renovations

Renovations to your primary residence are not tax deductible, and the interest on the borrowed portion used for that purpose is also not deductible.

If you're considering debt recycling or using a portion of the released equity for investment purposes, the loan needs to be split so that interest on the investment component remains deductible while interest on the renovation portion does not. Most lenders will establish separate loan splits at settlement, allowing you to track each purpose independently. This becomes relevant if you later convert the property to an investment or use part of the equity for an investment purchase.

For litigation lawyers who may relocate for career progression or partnership opportunities, maintaining clear separation between deductible and non-deductible debt from the outset avoids the need to reconstruct loan purposes later when the property is rented out.

Refinancing timing and approval considerations

Lenders assess your current income and liabilities when approving a refinance, so timing matters if your billing structure has changed recently.

Litigation lawyers moving from salaried associate roles to profit share or performance-based models may find that lenders require additional documentation or average income over two years rather than relying on the most recent year's return. If your taxable income dipped due to a large deduction or a period between roles, that can reduce your borrowing capacity even if your current earning trajectory is strong.

If you're planning a refinance within six months of a role change, it may be worth completing the refinance before the change takes effect, provided your current income supports the new loan amount. Alternatively, waiting until you have two years of tax returns in the new structure may provide access to better rates or higher leverage, depending on how your income is characterised.

Choosing whether to switch lenders or stay

Switching lenders during a refinance can provide access to lower rates, offset features, or better redraw terms, but it also involves discharge fees and settlement costs.

If your current lender offers a retention rate that sits within 0.10% to 0.15% of the most competitive market rate and your loan already includes offset and redraw, staying with the same lender reduces the time and cost involved in settlement. Most lenders will process an internal refinance within two to three weeks, and discharge fees are avoided entirely.

If your current rate is significantly higher or your lender doesn't offer the flexibility you need for managing offset accounts or splitting the loan for tax purposes, switching may deliver enough benefit to justify the upfront cost. A broker familiar with equity release loans for lawyers can compare retention offers against external options and calculate the break-even point based on your loan size and intended holding period.

Call one of our team or book an appointment at a time that works for you. We'll model your equity position, compare lender options, and structure the loan to match both your renovation timeline and your broader financial plan.

Frequently Asked Questions