Financing Home Improvements

Even basic home improvements cost money, and you may want to consider taking out some finance to ensure you have the right budget to complete any redecorating or alterations to a good standard.

The first step is to think carefully about what home improvements you would like to carry out, and create a realistic budget for both materials and works. You should remember to include an additional amount for any extras that may come up during the course of your home improvements and a good guideline is at least 10% of the original budget.

There are a number of financing options available to home owners who want to make improvements, and the most common is to get either secured or unsecured personal loans, available from anywhere from £500 – £30,000 depending on what kind of work needs doing:

Secured Loans against Your Property – these types of loans are usually offered by lenders at very competitive rates of interest, and have longer repayment periods than unsecured loans, but remember your home could be at risk if you do not keep up repayments against your mortgage or secured loans.
Unsecured Personal Loans – if you have a current or savings account with a bank or building society then you will probably be able to apply straight away for a unsecured personal loan with the same bank, and the amount you can borrow will be subject to your credit history. You can also apply for loans with lenders you do not have existing accounts with, and again the amount you can borrow and the success of your application will depend on your credit history. Unsecured loans do tend to be more expensive than loans that are secured against property, and usually have shorter repayment periods and higher monthly repayment amounts.
Overdraft – some current accounts allow you to have overdraft facilities at competitive borrowing rates, although overdraft limits are generally quite low, only up to around £2500 for most regular account holders so is not a viable option if you have major home improvements in mind.
Cash Advance on Your Credit Card – some credit cards offer cash advance facilities, or credit card ‘cheques’, which can be a good way of using your credit card to pay for building and redecorating services which don’t take regular credit card payments. However borrowing cash against your credit card is normally charged at much higher interest than normal, so this can be a very expensive financing option.

Before you apply for any finance for home improvements make sure you have set a realistic budget, and that you can afford to cover the monthly repayments.