Home Improvement Loans

What is a Home Improvement Loan?

If you are a homeowner, it is highly likely that at some point, you will want to change or improve some aspect of your home – whether that means you want to replace the kitchen, or revamp the bathroom, there are loans available to you from a number of dealers. A home improvement loan could be used to add valuable space on to your existing property, saving you the greater hassle and expense of moving to a new home.

What does a Home Improvement Loan offer?

Unlike some other loan types, a home improvement loan does not necessarily need to be spent on your home exclusively. Some of the funds could be used on a new car, or a new sofa, for example, so home improvement loans offer flexibility. Whatever you decide to spend the money on, just ensure you have the correct planning permission before adding a couple of floors on to your home.

Home owner loans tend to be secured loans. This can be a good option as you can borrow a significant amount of money for a long term at a lower APR (Annual Percentage Rate) than you can with a personal loan. A secured loan is also a sensible alternative, as you will potentially be adding value to your property by making improvements to it. This could lead lenders to view your application more favourably, as their money will be secured against a higher valued property. Lenders will then ask you to make regular monthly repayments on your loan.

Before you decide on the size of your loan, closely budget what you can realistically afford to borrow. Do not be tempted to borrow more than you realistically need. As with any loan, it pays to look at the TAR (Total Amount Repayable) for your loan. A high interest rate could result in you paying far more for your improvements than you had anticipated.

It must be remembered however that failure to keep up repayments on a home improvement secured loan puts your property in jeopardy, and that the lender is entitled to sell your property to reclaim your outstanding debt. You may be faced with visits from bailiffs, receive CCJs or negatively affect your credit rating. More importantly, because your home may have been given as surety for your loan, so you may face the risk of your home being repossessed. If you do decided to apply for a secured loan, be sure to apply with a well-known lender with a good reputation to protect yourself from unscrupulous lenders.