Whether it's adding an extension, converting a loft or simply modernising your kitchen, improving your home can be a very worthwhile investment in case you ever decide to move in the future. Kitchens and bathrooms are amongst the top things that buyers look for when viewing potential homes so sprucing yours up may well be a priority.
However, finding a loan for a kitchen, or even a home extension loan can be a daunting task, with countless options on the market. We take a look at the best loans for home improvement and what features you need to consider.
What is a home improvement loan?
A home improvement loan is simply a type of borrowing which is used to fund work being done around a property; you might also see this called a renovation loan.
There is no definitive basis for this type of loan; although most borrowers opt to take out an unsecured loan it is entirely feasible to apply for a secured loan too. One deciding factor may be the level of repayments. Most lenders provide an online loan calculator to help you work out how much it will cost. After all, there's no point applying for something you simply can't afford.
Home improvement loan rates will vary depending on your credit history, the type of loan – unsecured or secured – as well as the amount you want to borrow. As a general rule of thumb, borrowing more money means you will qualify for a lower interest rate; typically loans between £7,000 and £15,000 offer the most competitive deals.
If you aren't sure which option offers the best solution, you can compare home improvement loans in order to take a look at the relative costs.
Comparing refurbished home loans
The interest rate and type of loan aren't the only two factors you should bear in mind when deciding where to apply.
Some brokers charge a set-up or introductory fee which can sometimes run into the hundred of pounds. This could make it an expensive option and particularly unsuitable if you don't have that kind of money to pay upfront.
Fixed interest rates are another attractive feature as it means you have the assurance of knowing exactly what you are paying. Variable rates might be cheaper if the market drops but can also work out significantly more expensive too. And budgeting for a loan which fluctuates up and down can be more challenging, especially if money is tight.
Find the right lender
Although there are a multitude of companies providing all kinds of finance, whether a complete refurbishment or just a new conservatory loan, the options are almost endless.
However, unless you are one of the lucky few with an unblemished credit history, you might find that some lenders are more suitable than others.
If you are looking for a home improvement loan bad credit can make things more challenging but there are lenders out there willing to consider applicants with a less than perfect credit rating. Look out for companies that advertise this; it can knock your credit rating further if you have to make multiple applications because you appear desperate for credit.
A home improvement loan for pensioners is another set of criteria which isn't always available in the mainstream. But if you carry out a house improvement loan comparison you will be able to identify how much the borrowing is likely to cost, and then find a lender willing to offer senior citizens suitable terms. Some lenders are better than others at assessing non-standard income such as pensions and investment income, both of which are more commonly seen with more mature applicants.
Finally, whilst refurbishment loans can offer a realistic way to transform your home, it's essential to have realistic expectations. Having a better kitchen or bathroom, or even a slightly larger footprint by erecting an extension will certainly attract buyers but you may well find the increase in value is less than you pay in order to make the improvements. This won't always be the case but frequently home improvements should be carried out primarily for your benefit, not simply as a future investment.