Turning Your First Home Into Your Dream Home: Financing Home Renovations
Whether you’ve just purchased your first home or are actively house-hunting, chances are you’ve noticed a trend: finding the perfect, move-in-ready home is no easy feat.
66% of first-time buyers opt for second-hand homes, however the reality is many properties need upgrade – be it a new kitchen, better insulation, or a much-needed extension. For those currently looking, homes in “walk-in condition” often come with a hefty price tag, leaving properties in need of work as the more affordable (and realistic) option.
The good news? Financing renovations is possible. Whether you want to include renovation costs in your mortgage when buying or tackle improvements later, there are smart, flexible ways to make your dream home a reality. Here’s how –
Option 1: Financing Renovations When You Buy
If you’ve found a house that needs work, you might be able to include the renovation costs in your mortgage. Here’s how it works:
Let’s say you’ve been approved for a mortgage of €450,000, based on an expected purchase price of €500,000. You find a house for €450,000, but it needs €50,000 worth of work to make it suitable for family liveable. As long as the finished value of the home is €500,000 (or more), and the loan-to-value (LTV) stays at or under 90%, the bank could finance both the purchase and the renovations.
What you’ll need:
- A detailed breakdown of renovation costs (your contractor can help with this).
- An estimated post-renovation value from one of the bank’s approved valuers.
The bank will release the mortgage funds for the purchase and then release the renovation funds in stages as the work progresses. To get those stage payments, you’ll need invoices for non structural work or certifications from a surveyor, engineer, or architect where works are structural in nature.
Option 2: Mortgage Top-Ups for Renovations
Not ready to tackle renovations right away? No problem. Once you’ve lived in your home and figured out what changes you want, you can apply for a mortgage top-up to fund the work.
A top-up is essentially an equity release—borrowing against the value of your home. For example, if your home has increased in value since you bought it (thanks to rising property prices or paying down your mortgage), you could use that extra equity to finance renovations.
Here’s what to keep in mind:
- Central Bank lending rules apply. If it is your first home, this usually means borrowing up to four times your income.
- Banks won’t lend more than 90% of the home’s value—and some will cap this at 70% for top-ups.
If your current equity isn’t enough, banks can base their valuation on your home’s estimated post-renovation value.
Other options when it comes to financing works
Homeowners today have more options than ever for financing renovations, especially with the introduction of schemes like the Home Energy Upgrade Loan Scheme through the Strategic Banking Corporation of Ireland (SBCI).
This scheme offers unsecured loans from €5,000 to €75,000, with repayment terms of up to 10 years, specifically for energy efficiency upgrades. Think better insulation, solar panels, or heat pumps—all of which can boost your home’s Building Energy Rating (BER). Even better, these loans can work alongside grants from the Sustainable Energy Authority of Ireland (SEAI), making green upgrades more affordable.
Why it’s worth it:
- Homes with higher BER ratings qualify for Green mortgage rates, which are the lowest on the market.
- For example, AIB offers a three-year fixed rate of 3% for A-rated homes compared to 4.55% for non-A-rated homes—a difference of 1.55%.
Small Steps, Big Savings
Renovations aren’t just about making your home look better—they’re also a smart investment. Upgrades like better insulation or renewable energy systems can lower your energy bills, while structural improvements can increase your home’s value.
Plus, in a market where homes in “walk-in condition” command premium prices, creating your dream space is often more cost-effective than waiting for the perfect property to appear.
Pro Tip: Shop Around for the Best Mortgage Deals
Don’t assume your current lender will offer the best deal for a top-up or renovation loan. With 12 lenders now operating in the Irish mortgage market, rates and terms vary widely. A broker can help you find the best option, including Green rates or cashback offers.
Ready to Renovate?
Buying a second-hand home or upgrading your current one doesn’t have to feel overwhelming. Whether you’re financing renovations at the time of purchase or after living in your home for a while, there are flexible options to help you create a space that fits your lifestyle—and your budget.
Your dream home might not be move-in ready, but with the right financial tools, it’s closer than you think.
Whether you are a first time buyer or an existing homeowner looking to carry out home improvements, contact our team, we can guide you along the way.
Home Purchasers – Start Here
Home Owners looking to finance works – Start Here
