> Home Improvement Loan - UK Guide
In a nutshell
A loan to be used for home improvement purposes.
Best Loan for
Anybody looking to make home improvements. A home improvement loan is particularly good if you don't want to use your savings/don't have sufficient saved for your home improvement project
The amount you will be allowed to borrow will really depend on the lender you use and the type of loan you commit to (i.e. secured or unsecured). You will also be assessed on criteria such as your income, your spending and your credit rating in certain cases. Some lenders will also limit amounts depending on what you want to use your home improvement loan for. You can raise home improvement finance to cover anything from a small project to major building work.
This will vary depending on your lender, your loan type and how much you need to borrow - your loan can last for anything between 1-25+ years.
If you take out a specialist home improvement loan deal then you may find that your money is paid in instalments before pre-agreed work is completed. This allows you to manage your budget much more effectively and access your cash simply when you need it. So, if you spend less than you budgeted for, then you could save yourself some money by not borrowing more than you needed to. And, if you go over budget, then you'll still have ready access to the money you need. You can also tie your home improvement loan into your existing mortgage package - so you will benefit from lower interest rates and may be able to release equity to help fund your project.
What to look out for
Many home improvement projects can cost more than you originally anticipated - and, if you've opted for an instalment based loan then it's all too easy to get carried away as you know that the money will be available to you. And, some lenders will cap your borrowings so - if your project is more expensive than your budgeted loan - you could be left short at the end of your project. Many lenders will be flexible here but, even if they are, this will cost you more money than you planned for. Most consumers will secure their home improvement loan against their property to access better rates - there is always the risk here that you could lose your home if you don't make all your regular repayments. Although you can take out payment protection insurance to help prevent this, it will cost you more to do so. Many of the home improvement projects that we carry out are relatively expensive - and it's easy to forget that we will have to be making extra payments over longer terms for them which all adds up to a lot of repayment money. And, many consumers undertake home improvement projects because they believe that they are increasing the value of their property - so they think they'll get their money back later in life when they move. The reality is that few home improvement projects will actually bring in the same or more than they cost. So, you could well find yourself out of pocket.
A standard personal loan package may suit you just as well here. As an alternative you can look at using your mortgage to release equity or raise extra finance.