Are you eligible for a home improvement loan?

Written By: Hannah O'Neill
Published: September 11, 2023

Home Improvement Loan Eligibility: Discover Whether You Can Get One Of These Loans

Are you thinking about making some much-needed home improvements? Many households are choosing to renovate and extend their properties instead of going through the stress of moving, and a home improvement loan allows you to repay the money over months or years, instead of having to save up. But are you eligible to apply? In this article, we’ll explore home improvement loans and how you can apply for one.

What is a home improvement loan?

Home improvement loans provide money for various home renovations and can come in the form of secured and unsecured loans.

These loans give homeowners the cash to undertake various improvement projects, such as upgrading a kitchen, buying new sofa chairs & furniture, adding an extension, renovating a bathroom, or making structural repairs.

Upon successful application, you’ll receive a fixed amount of money which you’ll repay over a set period, along with the interest and other fees.

Secured home improvement loans

If you’re a property owner or have other valuable assets, you could apply for a secured home improvement loan. These loans are typically secured against your home, which means you can usually borrow more money as lenders can recover any defaulted payments.

As the lenders have more security, the loan will often offer a lower interest rate, making it an affordable option if you want to pay it back over years.

The cons of secured loans

However, while secured loans have numerous benefits, the main issue is that you could put your home at risk if you don’t stick to the agreed monthly repayments.

Also, not everyone is eligible for the loan because you’ll need to build up equity in your home before applying.

Unsecured loans for home improvements

Unsecured loans (also known as personal loans) don’t require any assets and are accessible to anyone—as long as you meet the eligibility criteria. If you’re planning general redecorating or minor renovations, they offer more flexibility in terms of repayment periods.

Also, you don’t have to worry about losing your home, making personal loans a popular option.

The cons of unsecured loans

You can’t borrow as much money as with an unsecured loan, so your renovations might be limited by budget. These loans often have higher interest rates, and you pay them back over a shorter period (usually between one and five years).

Also, while you won’t lose your property, lenders can take you to court and seize your belongings to recover any defaulted repayments.

Why choose a home improvement loan?

Home improvement loans can pay for much-needed repairs, give your property a new lease of life and let you stay in the property you love. According to Halifax, the average cost of moving home is £12,000, which doesn’t include the monthly mortgage payments.

With the stress of finding a new home and waiting to exchange contracts, renovations can add more living space and save you time and money.

Increase property value

Even small improvements can add a lot of value to your home and improve its marketability. According to Zoopla, loft extensions add around 15% to the property’s value, while investing in creating space for off-street parking can add a whopping £50,000.

If you’re having problems selling your home or want a better price, investing in renovations can generate more interest from prospective buyers.

More living space

One of the main reasons for moving house is to accommodate a growing family. However, moving home is recognised as one of the most stressful things a person can go through in their life, and families can find it challenging to balance the move with work and child care.

Using a loan to add an extra bedroom can increase the value of your home and give your family the space it needs to grow.

Remortgaging your home

The value of your home impacts mortgage eligibility, and lenders also look at how much equity you own. Remortgaging can help you release some of the equity to pay for holidays, private schooling and anything else you might need.

However, the remortgage amount depends on your property’s loan-to-value ratio. Increasing the value through a home improvement loan means potentially getting a better remortgage deal.

Are you eligible for a home improvement loan?

Your eligibility for these loans depends on numerous factors, including whether you want to opt for a secured or unsecured agreement. Lenders also have different eligibility criteria, so consider the following factors before applying.

Do you own valuable assets?

You won’t be eligible for a secured loan agreement if you don’t own a house or other valuable assets. Even as a property owner, you’ll still need to factor in how much equity you’ve built up because it will define the amount you can borrow.

The more equity you own, the lower the LTV (loan to value) ratio is, which means lenders are likely to offer a higher loan amount.

What’s your credit rating?

All loan providers examine your credit history to decide whether you’re a reliable borrower. The lender might refuse the loan if you have a bad credit score. However, secured home improvement loans work differently, as lenders have more security.

A secured loan is easier to get with a bad credit rating, but personal loan providers might still accept your application—with high-interest rates.

Some people also find they can’t borrow as much money as they’d like, so they repay their credit card debt and get their score back on track before applying.

Is your financial situation stable?

It’s also important to consider your monthly spending and if you can afford the loan. Some lenders will ask about your employment situation and whether you have a regular income, as well as look at bank statements.

If you’ve defaulted on mortgage repayments, utility bills or credit cards in the past, it will impact your eligibility. You’ll also need to consider whether you can confidently make monthly payments, as failing to meet your obligations could result in serious repercussions.

Alternatives to home improvement loans

Unsure if a home improvement loan is right for your needs? There are alternatives available, and each has its benefits. However, before deciding which suits you, it’s important to consider the pros and cons.

Using a credit card

Credit cards are always an option for minor repairs, as you can reduce the outstanding balance by making regular monthly payments. However, it depends on the credit card limit and interest rate, as some cards are more expensive than loans.

Most credit cards also have lower limits than loan providers offer, so it’s unlikely that you’ll be able to use them for extensions or other major jobs.

Savings accounts

Many people pay for renovations using their savings account because there’s no interest, and it usually saves money. If you have enough savings, it’s worth considering. However, one of the drawbacks of dipping into your account is that you won’t have money in an emergency.


Remortgaging a property is when someone either switches to a different deal with their current provider or finds a new mortgage company. There are numerous reasons for doing this, including lower interest rates, better payment terms, or releasing money.

For example, if your mortgage is worth £50,000, you can remortgage for £60,000 and use the extra £10,000 for renovations. Your repayment history and credit score affect mortgage eligibility, so this option might not be available.

Applying for a secured or personal loan

So, now you know more about home improvement loan agreements, it’s time to decide whether they’re the right option for your needs. There’s no doubt that these loans can have numerous benefits when appropriately managed, but navigating the different lenders can be challenging.

Get impartial financial advice

Instead of jumping into the home loan application process, seeking advice from an impartial service is best. Believe Money isn’t a loan provider but a broker, and we work with clients to help them find the right loans.

Once we know more about your personal circumstances, our team will discuss your eligibility and ask how much money you want to borrow.

Access to specialist lenders

As loan brokers, we can access lenders that aren’t available for mainstream borrowing. These lenders are ideal if you have unique circumstances, as they review each case individually instead of using the traditional tick-a-box criteria.

Support with the application process

Once we find a lender that suits your needs, your dedicated broker will help you with the application process and discuss your monthly repayment options. Then, when everything goes through, you’ll receive the money and can begin home improvements.

Ready to get your dream home?

Working with Believe Money couldn’t be easier, and our dedicated team is just a phone call away. Our clients get a free zero-obligation consultation, and we add our small broker fees to the loan amount, so you don’t have to worry about any outright payments.

Please get in touch with us today at 01302 591 360 or fill in the online form, and we’ll get back to you.

About the Author

Hannah O'Neill

Hannah O'Neill

Hannah O'Neill is a leading financial expert with over 10 years of experience in credit and loans. She is helping people achieve their financial goals based in the United Kingdom. She has been featured in numerous media outlets. Her articles offer practical advice on how to improve your credit score, get the best possible loan rates, and manage your debt wisely.

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