Home Improvement Loans in the UK: Which Is Right for You?

Types of Home Improvement Loans in the UK

1. Personal Loans

Personal loans are quite common among homeowners who want to finance mid-size home improvement jobs. It is worth explaining that such loans are provided without pledging any property as they are unsecured. Best for average small projects such as kitchen remodelling, bathroom renovations, exterior improvements etc.

• Fast approval process.
• Fixed interest rates to make regular instalments predictable.
• No fear of losing your home if you fail to repay.

• Higher rate of interest than secured loans
• Limited loan amount (usually up to £25,000)

2. Secured Loans (Homeowner Loans)

Secured loans, sometimes called homeowner loans, enable you to take out a loan where your home is used to provide the money to cover the costs. These loans are designed to enable homeowners to cater for extensive home improvements such as extension, the addition of lofts or serious remodelling. The loan amount is usually between £ 10,000 and £ 100,000 or even higher. The amount depends on your property’s value and home equity. Can be extended for 5- 30 years, to give the borrower the ability to control the monthly repayment amount.

3. Remortgaging

This means the creation of a new mortgage to substitute the previous one, with a current provider or a different one. When you have enough amount of equity in your home, you can opt for remortgaging to have extra finance for the home improvement cost. When people use remortgage for home improvement, the lender raises your mortgage amount by unlocking the home’s equity. These are cash payments to you and can be used to carry out some renovations or repairs or to upgrade a house.

4. Green Home Improvement Grants

Energy conservation within any home makes it cheaper to maintain and is a sign of quality living. In the UK, there are quite several government grants and schemes that can be used for green home improvement. The ECO requirements ensure that energy-supplying companies must assist with the insulation of homes particularly those in fuel poverty. Funds are available to homeowners up to £50,000 for eligible households for works including insulation, boiler replacements, and heating controls.

How to Choose the Right Loan?

• Evaluate your requirements: The scope of the project and cost of undertaking.
• Compare interest rates: Get the best APR (Annual Percentage Rate) using a comparison website.
• Check the repayment terms: The repayment period is to be according to your budget.
• Be cautious about fees: For setting up and for repayment before completion of the time frame.
• Examine your credit score: A good score fetches a good rate.
• Meet your financial advisor: In case you are confused, your advisor can guide you well in terms of which one to prefer.