Paying for a new roof: savings, home loan redraw, personal loans and contractor finance compared
The main ways Australians pay for a roof replacement, what each costs over time, worked repayment examples, and what to check before signing any finance offer.
The cheapest way to pay for a new roof is usually savings or an offset or redraw balance, because you pay no new interest or only forgo the interest saving. If you must borrow, compare the total cost of a home loan top-up, a personal loan and any contractor or buy-now-pay-later arrangement, not just the monthly amount. On illustrative numbers, $25,000 over 5 years at 11.5% costs about $8,000 in interest; the same amount added to a home loan at a lower rate but repaid over 25 years can cost more in total, even though the monthly repayment is far smaller. Check every offer's comparison rate and fees, and never sign finance arranged at your door in a hurry.
This guide is part of the roof replacement quote checklist. It is general information, not financial advice.
The main options
| Option | How it works | Good for | Watch out for |
|---|---|---|---|
| Savings | Pay from cash | No interest; simplest | Leaves less emergency money; keep a buffer |
| Offset or redraw on a home loan | Use extra repayments already made | Low effective cost; flexible | Your loan balance rises; check redraw fees and limits |
| Home loan top-up or increase | Borrow more on your mortgage | Lower rate than unsecured debt | Spread over a long term, total interest can be high; may need a valuation and new application |
| Secured or unsecured personal loan | Fixed term loan, often 1–7 years | Clear end date | Higher rates than home loans; establishment and monthly fees |
| Contractor-arranged finance | Finance from a third-party lender offered through the roofer | Convenience | Pressure to sign quickly; price may be higher; check the lender and the comparison rate |
| Buy now pay later | Instalments, often interest-free if on time | Small amounts | Late fees; total limits; now regulated as credit with lighter obligations |
| Credit card | Pay the deposit or a stage | Short-term only | High interest if not repaid |
Since 10 June 2025, buy now pay later products are regulated under the National Consumer Credit Protection Act with responsible lending obligations adapted for them; check ASIC's Moneysmart for current rules.
Worked comparison (illustrative)
A homeowner needs $25,000 for a re-roof. Rates below are examples, not offers.
| Option | Rate | Term | Monthly repayment | Total interest |
|---|---|---|---|---|
| Personal loan, $250 fee | 11.5% | 5 years | about $550 | about $7,990 |
| Personal loan, $250 fee | 11.5% | 3 years | about $824 | about $4,680 |
| Home loan top-up | 6.0% | 25 years | about $161 | about $23,320 |
| Home loan top-up, repaid early | 6.0% | 5 years (extra repayments) | about $483 | about $4,000 |
The 25-year top-up has the lowest monthly repayment but the highest total interest. If you use a home loan, plan to repay the extra amount quickly. Use the roof finance calculator to test your own figures.
The arithmetic for the first row: monthly rate = 11.5% ÷ 12 = 0.958%; n = 60; repayment = 25,000 × 0.00958 ÷ (1 − 1.00958^−60) ≈ $550; total repaid ≈ 550 × 60 = $32,990, so interest ≈ $7,990, plus the $250 fee.
Checks before signing any finance
- Comparison rate. Lenders must show a comparison rate in credit advertising; it combines the interest rate and most fees for a standard example. Compare like with like.
- All fees. Establishment, monthly account, early repayment and late fees.
- Term. Shorter term = higher repayment, lower total interest.
- Who is the lender? Lenders must hold an Australian credit licence. Search the ASIC professional register.
- Responsible lending. Licensed lenders must assess whether the loan is unsuitable for you. Be truthful about income and expenses.
- Linked to the contract? If finance is offered by the roofer, read whether you can cancel the finance if the roofing contract is cancelled.
- Cooling-off. If both the roofing agreement and finance are signed at your door after an unsolicited visit, the Australian Consumer Law's unsolicited consumer agreement rules, including a 10 business day cooling-off period, may apply to the roofing agreement.
Insurance, grants and other money sources
- Insurance. If the roof was damaged in a storm, your home building insurance may pay part of the cost. Do not replace the roof before the insurer has assessed the claim. See storm damage versus wear and tear.
- Government programs. Some states and the Commonwealth run programs for specific upgrades such as energy efficiency, disaster resilience or cyclone retrofits in particular regions, and programs change often. Check your state government site and the Commonwealth's energy and disaster resilience pages; do not rely on a contractor's description of a grant.
- Hardship. If you cannot afford urgent repairs, speak to a free financial counsellor through the National Debt Helpline on 1800 007 007.
Common mistakes
- Choosing the lowest monthly repayment without looking at total interest
- Signing finance at the kitchen table on the day of the quote
- Using a credit card for the whole job
- Forgetting to keep an emergency buffer
- Paying more deposit than the legal cap because "the finance company requires it"
Frequently asked questions
Is a home loan always cheaper than a personal loan?
The rate is usually lower, but the total cost depends on how quickly you repay. Repaying the top-up over a few years is usually cheapest.
Can I claim a new roof as a tax deduction?
Not for your own home. For a rental property, roof repairs may be deductible and replacements are generally capital works; check the ATO's rental property guidance or ask a registered tax agent.
What is a green loan?
Some lenders offer discounted rates for energy-efficient home upgrades. Whether a roof qualifies depends on the lender's criteria. Compare the comparison rate with other options.
Should I drop scope to borrow less?
Drop items that are not needed, but not core items like sarking or edge protection. Re-check the quote using the quote comparison guide.
Sources
- Moneysmart (ASIC) — personal loans, comparison rates and buy now pay later
- ASIC — credit licensing and the professional register
- Australian Taxation Office — rental property repairs versus capital works
- ACCC — unsolicited consumer agreements
- National Debt Helpline — free financial counselling
