A person’s home is their castle, but even castles need a spruce up every now and then. If your home is in desperate need of repairs, your outdated décor feels like an eyesore, or you simply want to turn a profit when you come to sell, home improvements may be the perfect solution.
But, while often a wise investment with great returns, renovation projects don’t come cheap. Savings are usually the best way to pay for your home improvements, but this may not always be an option. If you don’t have the funds to hand or enough time to save, you may want to consider a home improvement loan.
In this article, the Loan Princess team will look at:
- What a home improvement loan is,
- What your home improvement loan can be used for,
- Whether home improvement loans are unsecured, and
- Where to go to get the best possible price for your loan.
What is a home improvement loan?
A home improvement loan is a type of personal credit specifically taken out for work to be carried out on your property. These loans allow homeowners to borrow up to £25,000 for terms of between one to five years.
They can be a great way of paying out for expensive home improvement projects such as boiler replacements or a new roof then spreading the total cost into manageable repayments over a set amount of time.
As with all loans, you’ll need to first be accepted by the lender for credit. You will have to sign an agreement stating you will repay the funds as agreed plus any interest you may have accrued. When you receive the money, you may be given a “payment holiday” of one or two months before you start to make your monthly repayments.
You get the money you need in an instant; funding your home renovation project without needing to dip into your emergency savings.
What can home improvement loans be used for?
Home improvements don’t come cheap, but even relatively small renovating projects can have a huge impact. Whether you’re looking to create the home of your dreams or simply add value to your property before putting it on the market, a home improvement loan can help make your plans a reality.
One of the most popular reasons to use a home improvement loan is to cover the cost of important repair works. Structural flaws and defects such as collapsed floors, leaking rooves, and rotting joists not only lower your property’s value greatly, they could also potentially cause serious damage if left untreated for too long.
Home improvement loans allow you to make the vital repairs your home needs immediately. You can pay your tradesmen for the work right away, then spread the cost of the bill into manageable instalments across your loan term.
This type of loan is suitable for a wide range of aesthetic home improvement projects too. According to research from the Federation of Master Builders and the HomeOwners Alliance, some of the most common home improvements can add more than £50k to the value of your property in just seven days.
If you’re planning on selling your home in the near future, here are the average profits you could expect to make on the sale of a property in Dorset with home improvements:
|Home improvement project||Average cost of project||Value added to home price on average||Profit made on a project|
|New kitchen including replaced flooring, worktops, and cabinets||£4,127||£26,838||£22,711|
|Remove interior wall to create open plan kitchen/diner||£3,426||£26,838||£23,412|
|Add lighting and decking to back garden||£3,971||£8,946||£4,975|
|Remodel space under stairs into a bathroom||£2,622||£11,928||£9,306|
|Add en-suite to master bedroom||£4,713||£10,437||£5,724|
The potential profits you could make by renovating your home before putting it up for sale are considerable, but you won’t be able to reap the benefits of your project until you find a buyer.
If you need money to pay your contractors, but won’t be able to afford it until after the sale, a home improvement loan helps you bridge this gap. You’ll get instant access to the funds you need to pay for the work, then spread the cost into manageable payments throughout the year.
Are home improvement loans unsecured?
In most cases, lenders will only accept you for a home improvement loan if you use your property as security on the money. Since home improvement loans often involve rather large sums of money – often of between £7,500 and £15,000 – this collateral helps to balance the risk to the lender should you default on your payments.
With a secured loan, your loan provider could hypothetically repossess your home if you fail to repay the money you have borrowed. However, this extra layer of protection does mean that secured loans are generally much easier to be accepted for than other forms of credit.
You’ll be told exactly how much you need to repay every month and how long for; meaning you can effectively budget around your repayments.
Some loan providers in the UK also offer ‘payment holidays’ for home improvement loans. That means that while you still receive the funds within hours of being accepted, you won’t need to start making your repayments for another two or three months.
On top of this, by securing your loan against your home, you may also be able to access even lower rates of interest. Bear in mind that while longer loan terms will lower the amount you repay each month, you’ll likely pay more in interest over the course of your loan.
Apply for a secured home improvement loan through Loan Princess
At Loan Princess, we’re on hand to help you find a suitable lender with the lowest rates and best possible terms for you.
All you need to do is submit your details into our simple online form and we’ll send your application to our panel of the top home improvement loan providers in the UK. We’ll let them know how much you’re looking to borrow, how long you want to borrow it for, and how you plan on paying it back.
Thanks to our close relationship with our lending partners, we know exactly what it is they look for in a borrower. This allows us to match you up with the lenders most likely to accept you for credit based on your credit score, history, and other information. You can then select the cheapest home improvement loan deal to suit your situation. It’s that simple.
Our service is also completely free of charge to you and you’ll get your answer within just minutes of submitting your application.
Talk to Loan Princess to start searching for the perfect loan for your home improvement project today.