It’s almost summer, the time you want your home to look its best, but we all know that improving your home costs money. In this article we discuss the uses of home improvement loans and what makes them an attractive form of borrowing compared to a traditional personal loan or remortgage.
Firstly a home improvement loan is a type of secured loan. They are used for exactly what they say on the tin, home improvements:
– General redecoration or renovation
– New Kitchen or Bathroom
– Landscaping Gardens
– Building an Extension…etc.
The whole point of a home improvement loan is to realise the desired improvements and add value to your home. Therefore, obtaining the most competitive deal is of the upmost importance, along with ease of application.
A home improvement loan offers both these benefits against unsecured loans or remortgaging. With an unsecured loan, you are borrowing money based on your personal circumstances and as a result of the lender not having any physical asset as security usually the rates are not as attractive as a secured loan. Unsecured loans also have a limit of £25,000 maximum borrowing under the Consumer Credit Act, so if you are intending on doing major home improvements, it is likely you will require more than this amount. Secured Loan providers will often lend upto £250,000 depending on your circumstances.
If you are tied-in to your existing mortgage provider and penalties would be applied if you wanted to remortgage elsewhere, then raising the funds by this method can be an expensive and also lengthy process. Although it is likely that you will achieve a more competitive rate by remortgaging than taking out a secured loan, the penalties that may apply to your mortgage deal may outweigh any potential savings in the interest rate.
So, you have decided you want a home improvement loan, the next steps are to search and apply for one. It usually takes about 2-3 weeks after your application has been initially agreed to receive your money, which is great news for those of you who don’t like hanging around to get jobs done! The easiest way is to go online and apply for a loan. Type in “home improvement loans” on any major search engine and take it from there, there are many secured loan providers to choose from, but using a secured loan broker will ensure you get access to most of the market in one go.
Under new Consumer Credit Act legislation secured loan lenders can only charge you a maximum of one month’s notice and one month’s interest if you wan to repay your loan early. It is therefore advisable once you have done all the improvements to remortgage the home improvement loan into your current mortgage at the earliest opportunity, as long as you don’t have penalties on your existing mortgage deal for doing so.
If you are unsure of whether a home improvement loan is right for you, the best course of action is to speak to a secured loan broker. They will advise you on the likely costs involved for borrowing the money and the application process. Remember though that you must be sure the loan repayments are affordable for you. Your home is at risk of repossession if you do not keep up repayments on a secured loan.