Is it Worth Getting a Home Improvement Loan?


Home Improvement
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Moderate to major home improvement projects can be financed in a variety of ways. One popular option is to take out a home improvement loan – a facility issued specifically for property renovations and refurbishments.

But is a specialist home improvement loan the best option available? What are the alternatives to a home improvement loan, and how do they compare in terms of convenience, flexibility and cost-effectiveness?

Unsecured Home Improvement Loans

The vast majority of home improvement loans are issued in the form of unsecured personal loans. This means that no security needs to be provided as collateral for the loan, as the facility is issued on the basis of merit.

Consequently, applicants are expected to have an excellent credit rating and adequate proof of income, in order to qualify. In addition, unsecured loans are always restricted in terms of size – typically available up to a maximum of £10,000.

Secured Home Improvement Loans

By contrast, there are no upper limits on how much can be borrowed when taking out a secured home improvement loan. With a secured loan, the funds are issued against assets of value (typically the borrower’s home), allowing the borrower to tap into some of the equity they have in their home.

Another benefit to secured borrowing is lower interest rates and more competitive borrowing costs in general. This is because secured lending is less risky for the provider, making asset-backed borrowing a more affordable option for the customer.

However, the borrower faces the risk of repossession of their assets, in the event that they are unable to repay the loan as agreed.

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Credit Cards for Home Improvements

One of the most affordable ways to fund minor to moderate home improvements is to consider applying for a credit card. Increasingly, issuers are providing new customers with an introductory 0% interest period, during which there are no borrowing costs payable whatsoever.

The same also applies to balance transfers, which usually attach a temporary 0% interest period, allowing the balance to be paid off (typically within a year) without paying any interest at all.

Remortgaging for Home Improvements

Another option is to remortgage – either increase the size of your current mortgage or take out a new loan entirely with a different lender. As with credit cards, this can pave the way for a highly competitive introductory period (typically 3 to 5 years) with a low fixed interest rate.

Remortgaging can be an attractive option as there are no strict limits on loan size, and the facility can be repaid gradually over the course of several years. At the same time, it could also mean extending your mortgage term significantly, while increasing the subsequent monthly payments you will need to make.

Which is Best for You?

Determining which of the options best suits your requirements means conducting the immediate and long-term calculations needed to ensure you are getting a good deal.

This is where independent broker support could save you time and money, helping you understand the options available and make the right choice. Your broker will also negotiate on your behalf to minimise all potential borrowing costs, sourcing only the highest-quality products from a top-rated panel of UK lenders.

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Craig Upton

Craig Upton supports UK businesses by increasing sales growth using various marketing solutions online. Creating strategic partnerships and keen focus to detail, Craig equips websites with the right tools to rank in organic search. Craig is also the CEO of iCONQUER, a UK based SEO Firm and has been working in the digital marketing arena for many years. A trusted SEO consultant and trainer, Craig has worked with British brands such as FT.com, djkit.com, Bridging Finance, Serimax and has also supported UK doctors, solicitors and property developers to gain more exposure online. Craig has gained a wealth of knowledge using Google and is committed to creating new opportunities and partnerships.