Apply for Home Improvement Loan

Representative example: If you borrow £34,000 over 15 years at a rate of 8.26% variable, you will pay 180 instalments of £370.70 per month and a total amount payable of £66,726.00. This includes the net loan, interest of £28,531.00, a broker fee of £3,400 and a lender fee of £795. The overall cost for comparison is 10.8% APRC variable. Typical 10.8% APRC variable

Looking for ways to fix up your home but not quite sure about the cost? Don’t worry; this easy-to-follow guide is here to help. It will answer your burning questions on home improvement loans in the UK.

Each month, nearly 7,000 people visit our site seeking advice on loans. So, you’re in good company.

In this guide, we’ll cover:

The top loans for home improvements
How to look at quotes and choose the best one
The main differences between a secured loan and an unsecured loan
Points to think about before you get a loan
How to use a home improvement loan calculator

We know that loans can be a bit hard to understand. That’s why we’ve made this guide as clear as possible.

So, let’s start your journey to finding out the cost of a home improvement loan for you.

What loan is best for a house that needs improvements?

Every year, individuals and families decide they need to make improvements to their home. This includes everything from a fresh lick of paint and new furnishings to more significant changes like a new kitchen or a loft conversion. But paying for these changes upfront is not always possible, and they turn to a home improvement loan.

A home improvement loan is a good option for anyone needing credit to complete a home renovation project. It’s not your only option, and we have listed some alternative loans and credit options towards the end of this guide.

Where to get a home improvement loan

You can find home improvement loans advertised with various financial institutions, such as:

Well-known UK banks
Building societies
Online-only banks
Online-online loan providers

You should only apply for a home improvement loan with a lender that is authorised and regulated by the Financial Conduct Authority (FCA). This will safeguard you against scams and irresponsible lending.

Home improvement loans for all purposes

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How do home improvement loans work?

Home improvement loans work identically to other types of personal loans. The lender provides a lump sum payment, usually into a current account and repayments begin the following month.

Fixed monthly repayments are composed of a repayment on the principal loan amount and interest on that amount. They continue for a fixed period which will ensure the full loan amount and applicable interest has been paid back. The repayment period can stretch anywhere from a few months to as long as 60 months. Paying back the loan early might trigger an additional fee.

These loans can be divided into unsecured personal loans and secured personal loans. The former is when no assets are listed as collateral in the credit agreement. If you do not repay on unsecured loans, the lender has no automatic right to seize your listed asset. However, they can take you to court and possibly enforce the debt through bailiffs or a charging order.

A secured personal loan does list an asset as security within the credit agreement. In the case of a home improvement loan, this is typically a vehicle, home equity or the home itself. If the individual repeatedly misses their monthly repayment in full, the lender has the right to repossess the asset to clear the loan amount.

How do I qualify for a home improvement loan?

Taking out a loan will be subject to affordability checks by the lender. They have a responsibility to make sure you can afford the repayments based on the entirety of your personal and financial circumstances. Not doing so goes against stringent legislation and best practices.

Consequently, the lender will want to make sure you are able to borrow the amount you need over the preferred repayment period and make repayments comfortably. To do this, they will ask about personal circumstances, including your regular employment income or pension. They’ll also check your credit score to look for exciting debts not disclosed and how you have managed loan repayments in the past.

There is no fixed benchmark that you need to hit. Each lender applies its own assessments. It is possible that the lender will only approve your loan if you agree to a higher interest rate or borrow less.

Before you apply for a home improvement loan

Prior to applying for a home improvement loan, you should first get an accurate quote and cost of the home improvements you need to make. This may include making a spreadsheet of product costs and speaking with trades workers. Borrowing too much on a home improvement loan is one of the biggest pitfalls because you end up paying interest on an amount you do not need.

You should also take the time to look at your credit score and have any errors removed. Mistakes on your file can drastically decrease your score and cause unfair loan denials.

Once you have done this, it is time to search the market for your options and use website home improvement loan calculators to get estimations of repayments. Remember that these are not 100% accurate. This stage should be the most time-consuming and research-intensive. Putting effort in here to find the better deals could save you a lot of money.

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When you apply for a home improvement loan

Always apply for a home improvement loan with a legal lender. When making your application answer all questions truthfully and disclose all debts. The lender is likely to find out about debts anyway when they look at your credit score.

Do not lie to improve your chances of getting the loan approved. Doing so could lead to unaffordable payments and a big debt problem.

After you apply for a home improvement loan

After you apply for a home improvement loan do not start applying for others. It’s time to sit back and wait for the lender’s decision.

Every time you make an application the lender is forced to complete a hard search on your credit file, leaving a flag to any other lender that looks at your history. These flags can indicate a money problem and cause the lender to reject your application. You should wait between them and never scattergun applications at once.