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Home improvement loans

Home Improvement Loans:
A Guide to Home Loans

You may be the proud owner of a new home which needs a little DIY work, or you may want to carry out major repairs to your existing home. Whatever your circumstance, if you want to enhance your property either to add to its value or just for your own comfort or pleasure, you may want to consider taking out one of a few home improvement loans, home loans, or homeowner loans to finance the work.

What can home improvement loans be
used for?

Many people think they are only eligible for home loans if they are undertaking major improvements. However, you can apply for a homeowner loan to cover any size of work related to the home, from as little as redecorating a bedroom to building a loft conversion.  Here are a few more examples of the kind of projects for which you can use a home improvement loan:

  • Extending your home by adding new rooms or even storeys

  • Buying new furniture

  • Landscaping your garden

  • Building a swimming pool

  • Building a conservatory

  • Renovating kitchens and bathrooms

  • Adding new flooring and carpets

What types of home improvement loans are on offer?

In general there are two main types of home loans to consider:

  • A secured home improvement loanIf you are a homeowner with a mortgage, you are eligible for a secured home loan. This type of home loan normally carries a lower rate of interest.  It is possible to qualify for such a loan even if you have or have had a bad credit history.

    Lenders are willing to take this risk because you can use your property as collateral. However, be careful as you could end up losing your home if you cannot keep up your regular homeowner loan repayments.
  • An unsecured home improvement loanIf you do not own a home or property, you will have to resort to applying for an unsecured home loan. This type of homeowner loan carries a much higher rate of interest as there are no assets you can offer to lenders as security.

What is the best home improvement loan to have?
 
There is no such thing as the best home loan deal. There is only a deal that best suits your personal circumstances. When you apply for a home improvement loan, your lender will need to have the following information, so that it can make its decision:

  • Your credit history

  • Your annual salary

  • Your outgoings

  • Type of application - joint or single

  • Value of collateral

  • Amount to be borrowed

  • Length of repayment 

A good starting guide to help you decide if a particular homeowner loan is good for you is to compare and contrast the typical APR or Annual Percentage Rate quoted by various home loan lenders.  Visit your local banks and building society branches to gather details of their best home improvement loan rates.  Alternatively, search the internet for the best home improvement deals of the day. While you are deciding, make sure you know exactly what the total repayment cost is going to be as well as any hidden costs or extras in your home loan.

Some important considerations before taking out home improvement loans

  • You may want to consider taking out some form of payment protection plan on your homeowner loanin order to protect yourself against unforeseen circumstances such as unemployment, illness, or accident.

  • If you are carrying out home improvements to boost the equity in your home, make sure you do research to guarantee that the work you will do will indeed add value and increase saleability.  There are certain home improvements which almost always add value such as a new bathroom or kitchen. However, there are others which may not make any difference and some which may even decrease the value of your home—not a good idea when considering taking out a home loan

  • Whatever improvements you choose to undertake, it is crucial that the work is compliant with building and planning regulations. 

Compare loan providers

 
 
 
 
 
 
 
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