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The number of people choosing to improve their properties rather than move home is up from 3% to 15%, according to a 2018 report. If you’re one of them, a home improvement loan can help you fund your refurb, whether it’s a new kitchen or a cellar conversion.
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 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 couldl 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.
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. Also remember the representative APR advertised with the loan has to be available to at least 51% of successful applicants, but not everyone will get it.
- 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.
You can search based on:
- how much you want to borrow
- the amount you can afford to pay back each month
- 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.
Can I get a home improvement loan with a bad credit score?
Yes. 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.
How can I compare home improvement loans?
To find a great home improvement loan quickly and easily, simply try our comparison service.