Types of home improvement loans
Home improvements can involve many types of activities, from adding an extension to your property to renovating whole rooms – or it could just involve repainting existing walls. Your goal may be to make your home more pleasant or practical to live in, either for yourself or tenants. You may also be considering it from financial standpoint, for example, to try to increase the value of the property.
If you’re looking to make home improvements in the hope that they may boost the value of your property, try to picture what potential buyers may appreciate. Perhaps the lights need rewiring or the boiler needs to be replaced – make a list of relevant jobs and the related costs. Be aware, though, that it may be the case that any changes that you make may not impact the value of your home.
Financing home improvements
If the cost of the job is significant, you might find that you’ll need help to finance it. Once you’ve decided on what work needs to be done, you’ll have to check that you can afford it. Do you have enough savings, or can you budget your income and expenditure to finance the project?
Or perhaps you’ll need to take out a loan. Types of borrowing can include the following:
- Personal home improvement loan
This is an unsecured loan which advances you money for a specified number of years. The interest and payments on this type of loan are often fixed, which can be useful for budgeting.
- Secured loan
Secured loans allow you to borrow larger amounts, often at more competitive interest rates. However, you’re typically using your home as a guarantee to the lender that you’ll make your repayments. If you default on these, you could risk losing the property.
You may also consider remortgaging. This involves switching mortgages to allow for extra funds to finance your home improvements.
Getting ready to apply
If you’re applying for a home improvement loan, secured loan or remortgaging deal, you may find it useful to check your Equifax Credit Report & Score in advance – it’s free for the first 30 days, then £7.95 monthly. Checking your Equifax Credit Report will let you view your borrowing history. If you notice any errors, it’s best to try to get them corrected before you apply for that home improvement loan. Your Equifax Credit Score, on the other hand, gives you an indication of how creditworthy the lender may find you.
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