Your home is your humble abode,where you and family spend the majority of your time. Whether it’s a new kitchen, an extension or just general repairs, making home improvements can be a great way of not just improving your day to day living but also increasing the value of your property. However, as good as this sounds, home improvement does come at a price and with many projects requiring a significant initial financial outlay a lot of us will have to resort to personal finance to fund the work.
What is a home improvement loan?
A home improvement loan is typically an unsecured loan and is used, as the name suggests, to help fund improvements to your home.
How do home improvement loans work?
A home improvement loan works in exactly the same way as any other unsecured personal loan. You will be required to submit an application with a direct lender who then decides whether or not to lend to you. If approved, you will receive a lump sum paid into your account. You will then repay this money to the lender, with interest, in monthly repayments.
If approved the amount you are lent and the repayment terms will be outlined in your agreement.
Do you always get the advertised rate?
No not necessarily. Lenders can advertise the rate that 51% of their approved applicants receive. This is called a Representative APR and if approved is by no means a guarantee.
How much can I borrow with a home improvement loan?
This depends on a number of factors such as your personal circumstances, credit history and income. If you are considering an unsecured loan then amounts typically range from £100 to £25,000. If you look at using an asset, such as your property as security against your repayments, then the loan amounts available can be much larger.
How much does a home improvement loan cost?
When applying for a home improvement loan the prices offered by lenders will vary considerably depending on your circumstances, the lender you apply with and whether or not you secure the loan against an asset. The best unsecured personal loan rates are reserved for those with a great credit history. These top rates are generally offered by the banks or supermarkets. It is always worth shopping around as securing the best terms and lowest interest rates can make a huge difference to the amount you have to repay.
Can you get a home improvement loan with bad credit?
If you have a bad credit history you still have options when it comes to sourcing a home improvement loan. Your chances of acceptance will increase if you can provide security for your lender repayments. This could be in the way of getting a friend or family member to act as a guarantor or you could look at securing payments against your home. If you do choose to go down this route, there are the obvious warnings. If you secure against your home then your property will be at risk if you miss your repayments.
Will I be accepted for a home improvement loan?
Criteria will differ from lender to lender however you’ll have to be at least 18 years old, have a UK bank account, a valid debit card and be able to convince the lender that you’ll be able to meet the repayments. If you are applying for a bank or supermarket loan then you’ll need a spotless credit score.
The bottom line when applying for a home improvement loan is to make sure you can comfortably afford the repayments before applying. Any doubt, do not apply and reassess whether the project is really necessary.
Home Improvement loan FAQs
No. A high number of Unsecured personal loan lenders will not require you to be a homeowner.
Choose Wisely works with an extensive panel of lenders to provide you with options to compare, whatever your circumstances. By completing a quick 2 minute application you can compare offers from a range of UK lenders without impacting your credit file.