Compare home improvement loans
If you’re looking to make a change to your home, whether it’s a total renovation or a new kitchen or bathroom, Compare the Market can help you find the right home improvement loan to make your vision come to life.
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What is a home improvement loan?
A home improvement loan allows you to borrow a set amount in order to fund home renovations or other projects to your property. These typically come in the form of an unsecured personal loan, but you can also secure the loan against your home, which normally allows you to borrow larger amounts.
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What are the different types of loan for home improvement?
The kind of loan you choose will depend on your circumstances, preferences and how much you need to borrow.
- Up to £25,000 – an unsecured personal loan could be enough to cover the costs of your home improvements up to this amount. With this type of loan, you can borrow a lump sum of money (if you’re approved) without any collateral.
- Up to £100,000 – a secured homeowner loan could be the answer if you’re planning an extension or something more major. With this type of loan, you can borrow a lump sum of money against your property. You run the risk of having your home repossessed if you fail to make the repayments.
Usually, personal loans offer lower amounts and shorter repayment periods than homeowner loans.
How do home improvement loans work?
It depends on the type of home improvement loan you take out. Unsecured personal loans allow you greater flexibility, giving you shorter-term repayment options, and leave no collateral tied to the terms of the loan. This type of loan works like many others: you’ll agree an amount to borrow, how much you will pay in interest and over how long. If you fail to make a repayment on schedule, this may incur a penalty and your credit score will likely be affected.
A secured home improvement loan is normally tied to your home, which acts as collateral. If you fail to make a payment, you may be at risk of having your home repossessed by the loan provider. However, because they have received greater security as a lender, you are more likely to secure a better interest rate. You’ll also be able to borrow a larger amount.
Why a home improvement loan may be right for you
According to a 2019 report by TSB, 40% of homeowners would rather extend their property than move. If you’re one of them, a home improvement loan can help you fund your extension, conversion or refurb.
By providing you with the money you need up front, you can get on with making the improvements your home needs, while having the flexibility of paying the loan back over an agreed period of time.
What should I consider with a home improvement loan?
- Your budget: when you’re considering how much to borrow, think carefully about how much you’re going to spend on your project – figures show that two in five people who have renovated in the past admit to overshooting their budget by an average of 20%.
- The interest rate: loans can have a variable interest rate – so the monthly payments could go up or down. And if you've also got a variable rate mortgage, you could get hit twice if rates go up.
- Early repayment penalties: some lenders will charge you for paying off the loan early, so read the small print.
How can I find a great home improvement loan?
The good news is that it’s easy to compare different home improvement loan rates.
Our loan comparison page lets you look at the options for both unsecured personal loans and secured homeowner loans. You can search based on:
- how much you want to borrow
- how long you want to repay for
Then you’ll see a table listing all the options.
Something that’s worth looking at is the total amount payable. It shows you how much you’ll actually pay back over the term of the loan.
For example, paying off a £30,000 loan over 15 years could cost more than £40,000 in the end. But if you paid the same amount back over five years you might only pay £33,500.
That’s why it’s important to try to find a balance between affordable payments and a short loan period to avoid wasting money.
Frequently asked questions
Why make home improvements?
As well as giving you a better living space, home improvements can help increase the value of your property – provided they’re done properly.
According to figures from Hiscox, a new bathroom can put 5.7% on the price of your property, while a new kitchen typically adds 5.5% to the price.
When it comes to making structural improvements, a loft conversion can add 10.8%, while converting your basement can raise the price by 6.7%.
How much do home improvements cost?
Obviously, it depends on what you have done. Apart from the work itself, there are other costs to factor in, including getting planning permission (if you need it) and things like architect’s drawings.
To give you an idea with some ballpark figures, a loft conversion can cost anything from £20,000 to over £60,000 according to Which?, while installing new double glazing can cost as much as £3,000 per window.
What are the disadvantages of a home improvement loan?
When borrowing money, you should always consider the risk to your finances and credit score. Here are some of the most important things to think about:
- Penalties – be confident that you can make the repayments on time, otherwise you will likely be fined
- Home repossessed – if you secure your loan against your property and fail to keep up with your repayments, the lender may repossess your home and sell it to recover the debt
- Interest rates – are you comfortable with the amount to pay? Unsecured loans typically come with greater rates of interest than secured loans.
Can I get a joint home improvement loan?
Like many types of loan, you may be eligible for a joint home improvement loan. You’ll both be subjected to the standard credit checks, so it’s important to know that you both have a strong enough credit rating. As a pair, you may be eligible to borrow a larger amount.
Can I get a home improvement loan with a bad credit score?
Having a poor credit history doesn’t necessarily mean you can’t get a loan. It just means you may have less choice and potentially face higher interest rates.
What are the alternatives to a home improvement loan?
If you are refused, or simply want to avoid a home improvement loan, there are some alternatives to consider:
- Remortgage your home – by releasing some of the equity from your home, you may be able to borrow more from your existing mortgage lender
- Further advance on your mortgage – available from your mortgage provider as an additional loan, on top of your mortgage, if you haven’t already borrowed the maximum amount available to you
- Credit card – best suited to smaller amounts that you can repay quickly, you can find credit cards that offer 0% interest rates for an agreed period, which may be an ideal alternative for your home project.
How can I compare home improvement loans?
To find a great home improvement loan quickly and easily, simply try our comparison service.
