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Can I Get a Home Improvement Loan without Equity?

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Scott Nelson

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MoneyNerd’s founder, Scott Nelson, has a decade of financial industry experience, including 6 years in FCA regulated loan and credit card companies. Troubled by a lack of conscience in the industry, he founded MoneyNerd to give genuine advice to those in debt and struggling financially.

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Janine Marsh

Financial Expert

Janine Marsh is an award-winning presenter and a valuable member of the MoneyNerd team. With a wealth of experience as a financial expert, she's been featured on BBC Radio 4, BBC Local Radio, and BBC Five Live, and is a regular on Co-op Radio.

Learn more about Janine
· Feb 7th, 2024
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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

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

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Home Improvement without Equity

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

Dreaming of making your home better with a loan but feeling puzzled about the process? Don’t worry; we are here to help clarify all about home improvement loans, even if you don’t have equity in your home. 

Every month, just over 6,900 people visit our website seeking advice on loans. So, remember, you’re not alone.

In this guide, we’ll explore:

  •  How to get a home improvement loan without equity
  •  The best way to borrow money for home improvements
  •  The difference between a home equity loan and a home improvement loan
  •  Your options if you have bad credit or don’t own a house
  •  How to work out if you can get a home improvement loan

We understand that loans can be confusing. That’s why we’ve made this guide simple and straightforward. 

Let’s dive in and learn all about home improvement loans.

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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

Do you have to have equity in your home to get a home improvement loan?

You can get a home improvement loan without equity in your home. As most home improvement loans are either unsecured or secured against physical assets, you will generally not need to use property equity as collateral to get one of these loans. There may be some lenders who want to secure equity as collateral in the credit agreement, but you’ll have many other options to choose from instead. 

How to get a home improvement loan without equity

To get a home improvement loan with no equity in your home, you should search for lenders that offer these loans and do not use equity as collateral within the loan terms and conditions. This may mean looking for home renovation loans that are unsecured loans, or it may mean searching for secured loans that use cars or even your home as collateral instead. The latter will only be possible if you already own your home outright with no mortgage. 

Once you have found a home improvement loan without needing equity, you’ll have to ensure you qualify to apply. This typically means being of a certain age, having a minimum regular income and possibly declaring that you plan to live in the UK for at least half of each year. Approval of your application will depend on your finance and your credit score. 

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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No equity home improvement loan options

There are scores of no-equity home improvement loans to compare in the UK. You can find these types of loans offered by lenders such as:

  • Halifax
  • The Second Mortgage Company
  • Santander
  • SunTrust Bank
  • Hearth
  • Nationwide Building Society
  • NatWest
  • Ulster Bank
  • Lloyds Bank

This is not an exhaustive list and there may be better options available. The lenders and banks above have been included as examples of where to look only – subject to change. 

What’s the difference between a home equity loan and home improvement loan?

Home improvement loans and home equity loans can both be used to complete a home renovation project – but they are not the same. Home equity loans always use the equity in your property as collateral, meaning homeowners can be forced to sell their home if they do not keep up with payments. On the other hand, most home improvement loans do not use home equity as security. Instead, they are unsecured or secured against other assets. 

Thus, you are not required to have home equity to get most home improvement loans. But a home equity loan may offer a lower interest rate than a home improvement loan that is an unsecured loan due to less risk. Getting approval for either loan will depend on your credit score. 

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How do I know if I can get a home improvement loan?

Even if you meet the loan criteria, there’s no certainty that you’ll be able to get a home improvement loan until you get a decision on your application. Multiple factors need to be considered before the bank or lender says yes. 

You should not just apply to lots of lenders hoping one application will stick. Every application causes the lender to complete an assessment of your credit score. They leave a flag on your file each time to let other lenders know you’ve applied for cash. Too many of these flags can stop you from getting the loan because it suggests you could have undisclosed financial problems. 

Some lenders can help you work out if you’re likely to be accepted with a quote that doesn’t affect your credit score. They use your honest information and answers to questions within a pre-screening process. This can be useful and stop you from applying for home improvement loans that you’re not likely to get. Not all lenders offer this service. 

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The authors
Scott Nelson Profile Picture
Author
MoneyNerd’s founder, Scott Nelson, has a decade of financial industry experience, including 6 years in FCA regulated loan and credit card companies. Troubled by a lack of conscience in the industry, he founded MoneyNerd to give genuine advice to those in debt and struggling financially.
Janine Marsh Profile Picture
Financial Expert
Janine Marsh is an award-winning presenter and a valuable member of the MoneyNerd team. With a wealth of experience as a financial expert, she's been featured on BBC Radio 4, BBC Local Radio, and BBC Five Live, and is a regular on Co-op Radio.