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Granny flats and increasing value to your home

BY MARIA PAPA – Renovations are a great way to add value to your home. There are a number of finance options available to renovators, so it’s important to understand which type is best suited to your circumstances.


If you’re planning substantial renovations, a home equity loan might be worth exploring. This involves refinancing your existing home loan to release some of its equity, which can then be used to finance your renovation. To be eligible, your existing lending will need to be less than 80% of the value of the property, and you’ll need to be able to prove you’re in a financial position to service the loan.

Cash Out

You can borrow additional funds to put towards your renovation. Interest rates are still at its lowest so this may be an affordable option.  It is important that you ask your current lender what their best rates are since you are taking out a new loan.  Alternatively, you can speak to a broker who can find you a better rate.Â

Personal Loans

If it’s just a small renovation, then a personal loan might be a good option. Please note, however, that interest rates can be high, so this type of loan may only make financial sense if the amount you are looking to borrow is relatively small.

How to add value with a granny flat

There seems to be a trend towards adding a “granny flat” to your home. Granny flats can serve several purposes.  It can be a cost-effective way to provide a home for your elderly loved ones or older children struggling to pay rent. Granny flats built on investment properties can generate extra cash flow to the investor and increases the overall property value.

With rental yields of anywhere between $200-$600 a week, granny flats can be a great strategy if you’re looking for a long-term return on investment. Not only do they provide a second income, you can also benefit from positive gearing and extra claimables on your depreciation schedule.

By law, granny flats must comply with both the Building Code of Australia and any relevant Australian Standards. It’s also important to be aware of all rules and regulations relating to granny flats as these vary from state to state and even council to council, so do your homework first. Useful information can be found at and, as well as on your local council website.

You can use the same strategy as refinancing and cash out to fund the building of your granny flat.of 1.9%.

Maria Papa is a senior finance expert specialising in home loans, investment loans, self-employed loans, Lo Doc loans, car loans, personal loans and loan protection.  She has offices in Sydney and Melbourne.  If you have questions, you can call Maria at 0430 144 008 or email her at