Head of Content
Mortgage Advisor & Director
What is a home improvement loan?
Making improvements such as converting the garage into a home office, installing a new kitchen or upgrading the bathroom can add significant value to your home. Home improvement loans allow you to borrow money to fund renovations on your property. Generally speaking, we would advise using savings to make home improvements rather than take out a loan. However, if this is not possible, you may be interested in a home improvement loan. Home improvement loans can be both secured and unsecured, with more extensive borrowing tending to be secured.
How does a home improvement loan work?
With a home improvement loan, you will borrow a set amount of money to fund your improvement project. You will then repay the loan, plus interest, in fixed monthly instalments over a pre-set amount of time known as the "term". Your account will then be closed when you have made all of the monthly repayments, and the term is finished.
Unsecured personal loans allow you to borrow for smaller projects in the region of £6,000 to £10,000, such as installing a new kitchen or bathroom.
Unsecured means that you won't need to commit some form of security to borrow the money, for example, your home or even your car. The lender will be considering how reliable you are as a borrower, and will check your credit history and employment details. The maximum you can borrow with an unsecured personal loan is in the region of £25,000 depending on your financial situation and credit history.
When it comes to larger loans to perform more substantial renovations, such as an extension, structural improvements, or a full conversion project, secured loans are more suitable. With a secured home improvement loan, you can borrow up to £100,000 depending on your credit history and financial situation. With a secured loan, you will need to consider that your house may be repossessed if you fall behind with repayments. Another point to consider is that some lenders may impose early repayment charges if you repay the loan early.
Are home improvement loans a good idea?
If you have a good credit score, you might be able to find a great deal on home improvement loan. Home improvement loans can be beneficial in certain scenarios, for example, if you are keen to get started on your project but are still within your mortgage's fixed period. You may find you are offered the best rates for loans between £7,500 and £15,000.
As with any borrowing, you should make sure you can afford the repayments on top of the other commitments, for example, your mortgage repayments.
Getting a home improvement loan with bad credit
It may be possible to secure a home improvement loan even if you have bad credit.
However, you are likely to find that you are offered a higher rate and lower limits by lenders to mitigate the increased perceived risk of you as a borrower. If you are considering a home improvement loan and are prepared to wait, we would recommend taking steps to improve your credit history to boost your chances of approval and secure the best rates possible. Our advisors can help you with this.
Home improvement loan with no equity
If you want to remortgage to improve your home, you need to have enough equity in the property to do so. For small projects requiring an unsecured loan, you will not need to be concerned about equity.
Home improvement loan or remortgage?
The decision whether to take out a separate loan all remortgage to fund home improvements will depend on your project and your personal financial situation. Although the interest rates you'll achieve on your loan are likely to be higher than on your mortgage, the term is generally shorter, see you may end up paying less in the long run.
At Teito, our team of experienced advisers have helped many people like you to find the right finance for them. Whether you are looking for a personal loan, a secured loan, or to remortgage, we can find the right deal for you. Get started today, and we promise to make your mortgage journey as stressfree as possible.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
