One type of loan we’re contacted about a lot about here at Loan Broker is the home improvement loan. You might be interested in getting a new bathroom, a new kitchen installation, a new boiler, an improved central heating system, a garden make-over, new double glazing, an extension, knocking through rooms, fitting solar panels, getting a loft conversion, or adding an extra bedroom.
It’s your home and it’s special for that very reason. In this article, Loan Broker considers:
- what home improvement loans are spent on the most
- how home improvement loans can add value to your property
- the four most frequently-asked questions we get about home improvement loans here at Loan Broker
- home improvement loans for bad credit applicants – help from Loan Broker
What are home improvement loans spent on?
Home improvement loans are spent on a wide variety of modifications and alterations to borrowers’ homes. It’s all about making the place you live even more special but there’s another spin-off benefit to consider as well – that your home improvement project may just increase the value of your property.
In 2018, Towergate Insurance released an online calculator showing what the average home improvement project costs and how much it impacts on the value of borrowers’ homes. On the table below, you can see a list of projects whose average cost is less than £5,000 and the increase in house price created on a home valued at £200,000.
|Job||% house price increase||Average cost||Increase in house price||Profit|
|Adding extra or en suite bathroom||5%||£4,250||£10,000||£5,750|
|Replace wornout roof/flat roof with pitched roof||3%||£4,150||£6,000||£1,850|
|Carpets cleaned or exposure of hardwood flor||3%||£4,000||£6,000||£2,000|
|Install self-lighting/woodburning fireplace||5%||£3,500||£10,000||£6,500|
|Modern central heating system installation||5%||£3,225||£10,800||£7,575|
|Paint/decorate in neutral colours||5%||£2,850||£10,000||£7,150|
|Make kitchen and dining room open plan||6%||£2,100||£12,000||£9,900|
Home improvement loan FAQ
As we’ve seen, your home improvement loan not only enhances your experience of living in your property so that it’s more comfortable and more enjoyable, it can also add a lot of extra value to your home when the time comes to sell up.
We’ve compiled a list of the four questions we get the most at Loan Broker together with the answers we give to our valued customers.
Are home improvement loans unsecured?
Home improvement loans can be either secured or unsecured – and there’s a big difference between the two.
Just like it is with your mortgage, your home is at risk if you don’t keep up repayments on a home improvement loan. While it is highly unlikely that your home will be repossessed for missing one payment, your home may be seized by your lender if you miss a few repayments and then you and your lender can’t agree on a repayment plan together.
Secured home improvement loans do offer certain benefits though. With a secured home improvement loan, you can borrow more for longer at a lower interest rate as a general rule. However, because your home is on the line, you should think long and hard about whether it’s right for you and you should be absolutely sure that you can make all of the repayments comfortably now and in the future.
With an unsecured home improvement loan, your property can not be automatically repossessed if you miss repayments and you can’t then agree a repayment plan. The price you pay for this additional peace of mind is that you won’t be able to borrow as much, you’ll have to pay it back quicker, and your interest rate will be higher.
Can I use a home improvement loan if I am a tenant?
Yes – you can take out an unsecured home improvement loan if you’re a tenant but please bear in mind that you may have to leave some or all of these improvements behind when your tenancy comes to an end.
Secured home improvement loans are not available for tenants.
Do I need a good credit rating to be approved for a home improvement loan?
No – although the better the credit rating you have, the more options you’re going to have. This greater number of options also means that you’ll probably be able to get your home improvement loan at a lower interest rate as well.
There are lots of different lenders on the market who are happy to accept home improvement loan applications from borrowers with less-than-perfect credit histories – you can access many of them by making your application through Loan Broker – read below for more.
Do I need a guarantor for a home improvement loan?
No – and please think very carefully before considering taking out a home improvement loan with a guarantor. If you default on your home improvement loan, the lender will then come after your guarantor for repayment. As most guarantors are friends and family, it will put your relationship with them in real difficulty if a loved one has the responsibility of paying off a loan to improve your home and not theirs.
Home improvement loans for bad credit applicants – help from Loan Broker
Here at Loan Broker, we’re the experts in helping borrowers find the right unsecured home improvement loan for them and their household, even if your credit history is less than perfect. That’s because our carefully-curated panel of lenders are set up specifically to provide homeowners with bad credit the opportunity to finance the improvements they want to make to their properties.
The Loan Broker team believes that we all have the right to be proud of the home we live in and that when borrowers need help to do up their front room, modernise their kitchen, replace their current boiler, and more, they shouldn’t pay over the odds for a loan. How many of us have the spare cash lying around to pay for it all in one go, after all? If statistics are to be believed, after the last ten years, not many of us.
So here’s what we do – this is how we help. Once we have your application, we’ll review everything you’ve shared with us including the details on your credit file. We’ll then only present your loan to the lenders who we believe have the very best chance of saying “yes” to your application and of offering you the very best deal. We’re a broker – not a lender.
Our service is free, there’s no obligation to accept any loan we find you, and you get full disclosure on everything about the loan we find you so that you can make an informed decision – including the amount you pay every month and the overall cost of the loan.
To start your application, please click here.