Best Home Improvement Loans – Complete Review

Are you hoping to improve your home with a loan but feeling unsure about the costs and choices? This is the perfect guide for you. It answers all your pressing questions about home improvement loans in the UK.

Every month, almost 7,000 people visit our website seeking guidance on loans like these. So, don’t worry, you’re not alone.

In this guide, we’ll be covering:

•  The ideal type of loan for home improvements
•  Tips to compare quotes and get the best deal
•  The difference between loans that are secured and those that are not
•  Important points to think about before you take a loan
•  How to use a home improvement loan calculator

We understand that loans can be hard to understand. That’s why this guide is simple and easy. So, let’s get started and find out how a home improvement loan could work for you.

What type of loan is best?

Home improvements don’t come cheap. From new furniture to paying for contractors, the cost of enhancing your property comes at a cost that many cannot afford upfront. That’s why there are many options to access credit to pay for home improvements, not least a home improvement loan. These loans are specifically offered so homeowners can pay to improve their home.

There are other loans and ways of funding home improvements too, which we outline at the end of this guide. Make sure you stick around for those! 

Rates explained

Lenders must advertise any loan product, whether it be a home improvement loan or otherwise, by using an annual percentage rate that at least 51% of applicants are offered or better. This is known as the representative APR. 

This rate will be used on any home improvement loan calculator to predict what your repayments would be if you were approved for a loan. The calculator uses the amount you need to borrow and how long you want to repay the money to calculate repayments based on the APR representative.

It’s important to know that different representative rates can be advertised for different amounts. Many lenders prioritise advertising a single representative rate, which is their lowest rate. This is typically for loan amounts between £7,500 and £15,000. Loans below or above this value may have a different representative rate. 

However, because applications are based on individual finances and your credit score, the rate you are offered can still be much different. Remember that nearly half of applicants are likely to receive a different rate, which could also be lower. 

Home improvement loans for all purposes

• Stuck paying high interest on credit card debts & loans?
• Looking to fund a home improvement project?
• Dreaming of finally taking the once-in-a-lifetime trip?

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What are the lowest rates?

At the time of writing and subject to change, the lowest interest rates on home improvement loans are found for loans between £7,500 and £15,000 – sometimes as much as £19,950. There is a selection of high street banks and online banks advertising representative interest rates below 3%. 

The best place to get one

Our research – which is time-sensitive and can change – suggests that the best places to find the cheapest home improvement loans are with the UK’s most established high-street banks and online supermarket banks. Many of these advertise representative examples below or just above 3% for certain loan amounts. 

Examples

Below are some examples of the best home improvement loans based on representative APRs. They are not in a particular order and they may not be the very best home renovation loans around. You should research yourself and consider other lenders beyond this list. It is not exhaustive and their loans may have changed since this guide was published. 

1. Nationwide

Nationwide currently have a representative rate of 2.9% for loans between £7,500 and £15,000. They also have a slightly longer repayment period lasting up to seven years. 

2. Post Office

The Post Office also allows repayments to be spread over seven years if needed. Their representative rates change from as low as 2.9% up to 13.5%.

3. MBNA

MBNA advertises a representative rate of 2.8% for some loan amounts. You can borrow up to £25,000 with this lender. 

4. Tesco

Tesco advertises a competitive representative rate of 2.9% for loans between £7,500 and £15,000 that will need to be repaid within one to five years. 

5. M&S Bank

M&S Bank offers a home improvement loan between £1,000 and £25,000 with representative rates ranging from as low as 2.8% to 21.8% depending on the loan amount. 

6. Virgin Money

If you need between £7,500 and £15,000 then Virgin advertise a representative rate of 2.9%. The representative rate for lower or higher amounts is higher. 

7. Sainsbury Bank

Sainsbury Bank offers a similar home improvement loan to Virgin with their lowest representative rate reserved for those needing between £7,500 and £15,000, also 2.8%. 

8. Hitachi Personal Finance

This online lender offers home improvement loans between £1,000 and £25,000 to be repaid over five years. The lowest of their representative rates is 3.2%

9. NatWest

Natwest advertises these loans up to £50,000, and if you take out a bigger loan you get as long as ten years to repay. Loans between £7,500 and £19,950 are advertised with a representative rate of 3.4%. 

Interest-free loans

There are no interest-free home improvement loans at the time of writing. It would not make sense for a lender to offer a loan and create their own risk without making a profit out of doing so. If you want to access credit and pay 0% interest, then you may want to consider a credit card instead.

Some credit cards are provided with an initial period of 0% interest before switching to a fixed or variable rate. If you can access enough credit from one of these credit cards and repay before the initial 0% offer ends, you could borrow with zero or minimal costs – and improve your credit score in the process. 

However, there will be limitations to doing so and you are not likely to fund large-scale renovations with one of these cards and then repay within the 0% period. You would still need to make minimum monthly payments on the capital borrowed. 

What things should I consider?

When considering a home improvement loan, the first thing to consider is if you want to look for secured or unsecured loans. 

Using a secured option may enable you to access more credit (if required) and it may help you get a lower interest rate. However, with a secured loan you are putting assets at risk and you could even lose your home. It will be a personal decision whether you feel comfortable doing so, as unforeseen circumstances – such as injury or illness – could affect your income. 

The rate of interest is undoubtedly one of the biggest considerations when looking for these loans – and comparing your options. Everyone wants to borrow money for less, and this means finding a loan with lower interest.

We’ve explained how these rates are advertised between lenders below. Read on! 

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