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Home improvement loans

Home improvement loans

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Last updated: 07 April 2022

As a homeowner, the time may come when you want to take out a loan for refurbishments or repairs. Some will do this to increase the value of their property whilst others may just want to mix things up. 

When you begin to compare personal loans, it is important to assess what your reason is for the loan because that can affect how much risk you are willing to take on. This page will guide you through the different options you have when it comes to taking out a home improvement loan.

Can I take out a loan to help with home improvements?

Yes - much like you can take out a wedding loan or a holiday loan, you can take out a loan to assist you in paying for some much-needed home improvements.

A home improvement loan is pretty self-explanatory; it is a loan someone takes out to help fund home improvements or renovations, such as a new bathroom, kitchen, or home extension.

Taking out a home improvement loan is a viable way to help some people improve the value of their home, or give their home a revamp, without having to pay for all the work upfront.

How do I get a home improvement loan?

Its quite simple to do on usave.co.uk.

  1. Click the 'Start comparing' button below.
  2. Input details of how large a loan you are looking to take out, the repayment term, and then your personal details. You will then be presented with a list of loans available to you, without affecting your credit score.
  3. Select the home improvement loan that best suits you and your circumstances.

We recommend someone only ever take out a home improvement loan if they are adamant they will be able to repay it; don't take out debt if you will be unable to keep up with the monthly repayments.

See what loan rates are available at the moment

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What types of home improvement loan can I get?

Secured loans

Secured loans are loans taken out which are secured against an asset, most typically your home. This is also known as a home equity loan.

These loans are often long term loans and usually for larger amounts of money. They are called ‘secured' because they give the bank or the building society the ability to repossess your house or other valuable asset is you fail to make the monthly payments.

However, this means lenders have the ability to offer lower interest rates over a longer period as they see them as low risk.

These loans are generally used by people without a good credit score who are looking to take out large sums of money.

Personal/Unsecured loans

Personal or ‘unsecured' loans are simple and quick loans taken out with a lender with a pre-approved payment plan.

These are often short term loans, for a smaller amounts of money, and do not require you to put your house up as collateral.

They are commonly referred to as personal loans because they are for your own personal spending and therefore do not have to be for a specific project.

These loans are generally used by people with a good credit rating looking for small sums of money.

What should I consider when looking for a home renovation loan?

How much money you need to borrow

They key thing to consider when comparing home improvement loans is how much money you will need to get the job done. Usually, the maximum amount that can be borrowed unsecured is £25,000.

Your credit history

Your credit rating will help determine how much you can borrow.

Those with higher credit ratings are much more likely to be able to get a large, unsecured home improvement loan.

There are three different credit rating agencies and different lenders use different ones, so if you get rejected from one that doesn't mean all hope is lost! 

If you compare home improvement loans with usave, we will search through loans from a range of lenders across the market to help find you a personal loan that suits you without affecting your credit score.

Whether you are interested in variable or fixed interest rate

Both unsecured and secured loans can either have fixed or variable interest rates and it is therefore important to make sure you know what type of loan you interested in.

A variable interest rate means that your monthly repayments can change, whereas with a fixed interest rates your payments stay the same.

Unsecured or secured?

Unsecured personal loans are usually quicker to take out, and often have short-term repayments but available dependant on your credit rating. This type of loan is usually more suited to those with good credit looking for small improvements, but the interest rates tend to be higher. 

Secured loans are usually taken out over a longer term with larger amounts of money, but are riskier because your lender has the ability to take the asset which you secured the loan against. A secured loan is therefore more suited for a larger home improvement project or if you have a bad credit rating.

The risk in securing your current property against a loan, should not be underestimated. You should always compare loans and your different options thoroughly before taking on a secured loan.

Is a home renovation loan a good idea?

This really depends on you and your personal circumstances!

A home improvement loan can be a good idea, but only if you can afford it.

Before you take out a personal loan for home improvements, you should assess:

  1. Your current debts (e.g. credit cards, an existing loan) and how you are doing paying them off each month.
  2. How much the loan repayments will add to your current commitments, and whether you will be able to afford paying this off in addition to your current debts.
  3. The loan amount you will require for your home improvements, and whether the improvements carried out will add value to your property.

Borrowing money is something that should not be taken lightly; only borrow money you know you are able to afford and will help improve your circumstances in the short and long term.

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Fergus Cole

Author: Fergus Cole

Fergus is a journalist specialising in the personal finance, energy and broadband sectors. He also has a passion for travel and adventure so tries to make the most of this in any spare time he gets.

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