Home improvements, renovations and DIY can be expensive, especially if you are undertaking a large task that will be carried out over a number of days. Luckily, there are home improvement loans available to help you cover the costs. This type of loan can be used as an upfront payment for the changes that you or your contractors make to your house.
At QuidMarket, we offer short term loans for periods of 3-6 months, which may not be suitable for covering the costs of home improvements. However, we have your best interests at heart and believe that it is important for us to share a thorough scope of all the loan types available on the market to help you make an informed decision about which is best for you. On this page, we will cover home improvement loans, what could be classed as a home loan, and why this type of loan may be right for you. With this information, we can hopefully help you to make an educated choice when it comes to securing the perfect loan.
What Is A Home Improvement Loan?
Home improvement loans allow you to borrow a set amount of money to fund any home renovations or improvements to your property. This is typically classed as non-essential spending, so it is usually worth considering if the DIY work can wait until you have enough cash in your budget. However, if a loan is the only feasible option, you will tend to find that home improvement loans in the UK come in the form of unsecured loans. These types of loans are not secured against a personal asset, but usually have significant interest rates because of the higher risk with no collateral.
While unsecured loans are the most common type of UK home loans, you may also find the option for a secured home loan. These must be approached with caution as they are secured against an asset, such as your car or house, so if you struggle to make the repayments, your chosen collateral may be repossessed. You should only agree to a secure home loan if you are confident and comfortable with making the repayments.
Which Home Loan Is Best For Me?
When deciding between secured and unsecured home improvement loans, you will need to factor in your personal circumstances, preferences and the amount of money you need to borrow to cover the DIY costs.
Unsecured Home Improvement Loans In The UK
This type of home loan is also known as an unsecured personal loan and allows you to borrow money without securing your repayments against an asset. Approval is usually based on your ability to pay back the loan, so lenders will typically check your credit history, employment status and essential monthly spending. If you are planning to spend your loan on a smaller project, this may be a good option for you, however, there are a few things to consider:
- While you won’t risk losing your personal assets, failure to make repayments could result in a County Court Judgment (CCJ) against you, which could be detrimental to your credit rating.
- With no collateral as security, you may not be able to borrow as much as you would like.
Secured Home Improvement Loans in The UK
This type of home renovation loan is also known as a homeowner or home equity loan, and allows you to borrow a larger amount of money by using the value of your home as security. Depending on your financial situation and your credit history, you may be able to borrow much larger amounts of money to undertake projects over a few months, such as structural repairs. Interest rates of these types of UK home loans tend to be lower and repaid over a longer period.
Some things to consider with secured home improvement loans are:
- Some lenders may not accept early repayments and could impose a penalty if you try to pay the home loan back before the term is over.
- If you fall behind on your repayments, your house could be repossessed as the collateral for your loan.
The kind of home loan that you choose ultimately depends on your preferences and the situation that you are in. For smaller amounts of money, unsecured home improvement loans may be best for you, but for larger amounts of money for big projects, a secured loan could be the answer. Each has various points to consider before making a decision and if you need any more help, please do not hesitate to seek free and impartial advice from the Money Advice Service.
Why A Home Improvement Loan May Be Right For You
If you are planning some form of home renovation or have ideas about DIY projects that you would like to start, a home renovation loan could help. By providing you with the money that you need, you can begin working on your home and have the flexibility to pay the loan back over an agreed term.
There are several benefits to home improvement loans, including:
- If you select a home loan with fixed interest rates, you will be able to budget properly for your repayments.
- Once approved, you will have quick access to cash, often within days of the transfer confirmation.
- You can choose the period over which you will pay back the home loan, depending on the type of project you want to undertake and how long the work will take.
- Usually, you don’t have to specify what you want the money for, so if you end up spending less on the home improvements than you imagined, you can use the remainder for something else.
- There are various options of how much you can borrow. Some lenders may offer you up to £100,000 for your home improvements, which is ideal for long term projects, while some offer smaller amounts for quick home improvements.
Home Improvement Loans FAQs
What Are Home Improvement Loans?
Home improvement loans in the UK are a type of loan that allow you to borrow a set amount of money for undertaking home renovations, improvements and DIY projects. This could include installing a new kitchen or bathroom, or adding an extension to increase the value of your property. You can select the amount that you would like to borrow and the repayment term, depending on how long you plan to spend on your renovation project.
Can I Get A Home Loan With Bad Credit?
Having bad credit does not necessarily mean that you can’t secure a home loan, however, it may mean that you face higher interest rates and have less choice when it comes to choosing loans. Bad credit loans are typically based on affordability rather than credit score, so if you can show that you have a regular monthly income and enough money to cover the UK home loans repayments, you may be able to secure a loan.
Are There Any Alternatives To UK Home Loans?
If you have been refused for a home renovation loan or simply want to avoid having to pay a loan back, there are some alternatives to consider. You can remortgage your home to release some of the equity, potentially allowing you to borrow more from your existing mortgage lender. You could also request a further advance on your mortgage or use a credit card that offers 0% interest rates for an agreed period.
QuidMarket provide short term loans with terms of 3-6 months, which would not be suitable in place of home improvement loans. Our loans are designed to help people cover short term cash flows or unexpected, emergency loan situations, so they should not be used for long term financial difficulties. If you need more advice, please visit the Money Advice Service for free guidance, or contact the experts at QuidMarket.