But then you discover you can’t afford a new house?

Before you despair, you can have that bigger living room, that modern kitchen or that luxury bathroom. How, you ask? By visiting your local bank, re-financing, and renovating.

Sally Gallagher of the Commonwealth Bank said homeowners who want to expand and own a bigger house but cannot afford to step up into a higher price bracket can approach a bank and top up their home loan or borrow against their home to afford that extra room or bathroom.

Mrs Gallagher said banks had tightened lending over the last few months. She said if people find they could not get approval to buy a new home they should think about renovating as the next best thing to add equity to their home without the hassle of moving.

If your house is worth $200,000 and you only owe $100,000 on the house you can use the equity to renovate, she said.

“In some instances you may be eligible to borrow up to 90 per cent of the value of your property,” she said.

Home owners could approach a builder to draw up plans of what they want to do then go into the bank and see if they are eligible for the loan or vice versa seeing the banks first to work out how much money they can borrow then go to a builder to see what they can do, Mrs Gallagher said.