Personal loan for home improvements

A personal home improvement loan is also ideal if you haven’t built up much equity in your property.

If you see the term ‘home improvement loan’, it’s likely an unsecured loan, so be sure to check with your lender when applying.
 

The pros and cons of secured loan agreements:

• Pro: You can usually borrow more money as lenders have security.
• Pro: Most secured loans also have lower interest rates due to the equity you offer as an asset.
• Pro: A secured home improvement loan will also come with longer repayment terms.
• Con: The amount of equity defines how much money you can borrow.
• Con: Defaulting on your loan repayments could cause the lender to seize your property and recover their money.
• Con: Prolonged monthly repayments can often mean you pay higher interest amounts, and there are usually strict early repayment terms.

The pros and cons of unsecured personal loans:

• Pro: You don’t need valuable assets with unsecured loans, so anyone can access them.
• Pro: You’ll still be able to borrow more than a credit card would allow.
• Pro: As unsecured loans are simpler to arrange, you can often access the money quickly.
• Cons: Lenders incur more risk with unsecured loans, usually increasing the interest rates.
• Cons: While you can get a cash injection, the amount you receive will be less than with a secured loan.
• Cons: Personal loans often have shorter repayment terms which means you’ll clear the outstanding amount quickly – but you will also have to factor in higher monthly payments.

Determining your eligibility for a home improvement loan

Whether you’re applying for a secured or unsecured home improvement loan, certain things impact your eligibility. Knowing which you can apply for will save time and speed the application process along.

How much equity do you have?

A home improvement loan could help you pay for any work you want, but you’ll need to ensure you have enough equity. For example, conservatories can cost anywhere between £2500 to £12,000 and over – while major renovations such as a loft conversion range from £21,000 to £80,000.

Checking whether your equity covers the amount you want to borrow will save you time during the application process.

What’s your credit rating?

The great thing about secured loans is you don’t need a good credit score – because lenders have more security with the assets you offer. Good credit history will get you better terms with an unsecured loan, but bad credit can mean you’re not eligible with mainstream lenders.

How much would you like to borrow?

Secured loans mean you can borrow more money, but sometimes a higher loan amount isn’t always the best idea. For example, an unsecured personal loan might be better if you’re paying for some basic renovations because the repayment period is shorter.

What are your individual circumstances?

When applying for any loan, your personal circumstances will matter. Home renovations might be a wise investment, but any lender will want to look at your previous history with finance and credit.

For example, if you’ve received a County Court Judgement (CCJ) in the past or are already in a lot of debt, lenders might not want to offer you money.

Do you have a repayment term in mind?

Secured loans usually come with longer repayment terms, which means you could be locked into the agreement for years. If you’d prefer a shorter loan, the best solution is a personal loan, as you usually repay it over months or a couple of years.

Can you afford to make the repayments?

Before weighing up your borrowing options, it’s crucial to consider whether you can reliably make monthly repayments. Add up all the costs of your monthly outgoings and evaluate how likely your circumstances are to change.

If you lose your job or have interest rates increase with your existing borrowing, you could risk losing your home or face legal action.

Exploring other credit options

Minor renovations are suitable with a credit card with favourable interest rates. However, many people rely on their credit cards and can get into serious trouble further down the line.

Remortgaging your home

You can also raise extra cash by asking your mortgage provider for a new deal. However, this isn’t always the best option – especially if you’re on a great deal with fixed interest rates.

Compare home improvement loans with Believe Money

Home improvement loans can offer numerous benefits, but finding the right provider can be challenging. Believe Money is not a lender but a broker specialising in providing borrowing solutions that meet your needs – regardless of your circumstances.

With a massive network of lenders, we work with you throughout the application process, giving you peace of mind that your loan is the right choice.

Specialist lenders

We make it easy for you to fund home renovations regardless of circumstances. Mainstream lenders often use standard eligibility criteria, but specialist lenders will judge each application individually.

Our network of lenders means we can find the right lender and give access to borrowing solutions that wouldn’t otherwise be available.

Support during the application process

Our dedicated team of brokers will support you through the loan application process, ensuring you have everything you need to speed things up.

How much support you receive is entirely up to you, so if you’re happy to handle the application, we’ll still be around for help and advice.

Zero upfront fees

Many brokers charge upfront fees, so you must budget before beginning your home improvement project. We add our fees onto the loan, so you don’t need to worry about surprise charges.

Get a free consultation today