Whether you’re looking to install a new bathroom or undertake a complete renovation, a home improvement loan can help you to make your house truly feel like a home and add value to your property. Before making any big decisions, it is important to thoroughly compare home improvement loans to ensure you are getting the best possible deal and have the available funds to make your vision a reality.
Home improvement loans allow you to borrow an agreed sum of money to make improvements to your property. Unsecured personal loans are the most common form of home improvement loans, however it might also be possible to secure an improvement loan against your property which is often the ideal route if you are looking to borrow a large amount of money.
There are numerous ways in which you can add value to your property, including installing a new kitchen and adding extra space in the form of an extension. If, for example, you have an unused garage and want to convert it into an additional living space, the value of your property could increase by as much as 20%.
An unsecured home improvement loan
Also frequently referred to as an unsecured personal loan, if you opt for this type of loan, you will not be required to borrow against an asset. Approval for unsecured home improvement loans is based upon your ability to repay the sum you want to borrow, which means that lenders will want to take a close look at your credit history. Your preferred lender will also likely want to confirm whether you are employed as being able to demonstrate that you have a secure income will reassure them that you are in a good position to make consistent repayments.
Unsecured home improvement loans are often ideal for small projects, including updating a bathroom or kitchen, as you could be approved to borrow up to £10,000. Since you are not required to put up an asset as collateral, you likely won’t be able to borrow as much money as you might with a secured loan. It is also important to note that although failing to make repayments won’t cost you your home, you could be subject to a County Court Judgement (CCJ) and cause serious damage to your credit score.
A secured home improvement loan
Often referred to as a home equity loan, secured home improvement loans allow you to borrow more significant sums of money for larger projects by offering the value or equity of your property as security. Lenders will still want to look at your current financial situation and your credit history, but a secured home improvement loan could allow you to borrow anywhere up to £100,000. So, if your property needs some structural work or you want to conduct a comprehensive renovation project, this type of loan is likely to be the most suitable.
It is worth noting that interest rates on secured home improvement loans are typically lower and can be fixed over a set period of time, which will aid with the budgeting process of your project. Don’t forget that failure to make consistent repayments could put your property at risk. Also, many lenders will impose a fee for early repayment, so this is something to look out for when you compare home improvement loans.
Your circumstances should inform the type of home improvement loan you choose.
– If you’re looking to borrow up to £25,000:
An unsecured home improvement loan will likely give you enough money to complete your renovation project. If you are approved, you will be permitted to borrow a lump sum without offering an asset as security.
– If you’re looking to borrow up to £100,000
A secured home improvement loan is likely to be the best option if you are conducting a large-scale project. If you are approved and have the option to put up an asset as collateral, you will be permitted to borrow a lump sum against your property.
It is also important to consider your credit score. If your credit history isn’t perfect, you are more likely to be approved for a secured loan because you will be required to offer an asset as security.
Remember, your current financial situation will also be taken into consideration so it is essential to ensure you have the means to make consistent repayments over the course of your loan agreement. Unsecured loans often have shorter repayment terms, which is worth keeping in mind when conducting your home improvement loans comparison.
When approved, the money you need for your improvement project could be paid into your account within a matter of days.
– Often ranging between one and seven years, you can select the right repayment period for your needs and circumstances.
– In most instances, you won’t need to specify how you intend to spend the money. So, if your project comes in under budget, you could choose to use the remainder of the sum you have borrowed for another project.
As with all loans, there are a range of factors you should keep in mind when undertaking a home improvement loans comparison to ensure you obtain the best option for your needs.
– Your budget
In addition to taking into account the projected cost of your project, it is important to consider that unforeseen problems might occur which could increase your costs.
– Interest rates
If your chosen loan has a variable interest rate, your monthly repayments could increase or decrease. Additionally, if your mortgage also has a variable rate, there is the potential that an interest rate increase could hit you twice as hard.
– Repayment penalties
If you want to repay your loan before the end of your agreed term, some lenders will impose a fee. As such, it is crucial to read the fine print of any agreement before you sign it.