How can I arrange to pay for Home Improvements?
Sep 13, 2006
Whether you own a one bedroom flat, a semi-detached house or a castle, your home is probably going to be the biggest single investment you will ever make. To maintain and improve that investment often calls for additional expenditure over time.
Home improvement projects can vary enormously - from a simple interior painting and decorating job or double glazing throughout to a new bathroom suite; all home improvement projects cost money. Then, for the more highly ambitious, there are conservatories to loft conversions and even house extensions.
There are any number of reasons why people choose to improve their homes. Some need the additional space due to the size of their family increasing. Others insist their properties are in need of essential repairs whilst another group want to increase the value of their property before putting it on to the market. Others simply want to make their homes more comfortable and a place to be enjoyed.
How to raise finance
For smaller DIY jobs, people will often look towards using earnings or savings. However, there are still a vast number of people out there who finance expensive renovations by way of utilising one or several credit or store cards or by taking out unsecured personal loans. This option can often turn out to be far more expensive in the long run.
However, major renovation work will inevitably entail a greater level of financing and the most practical and sensible solution to that is the secured loan option.
The secured loan route enables you to borrow cash against the equity in your property, thus making you less of a risk to lenders which, in turn, ensures that you receive much more favourable interest rates than that of an unsecured loan or through credit card borrowing.
You do not have to own your home outright to take advantage of the benefits offered by a secured loan. Providing you have a mortgage, you can simply put up the proportion of the home that you own as security.
Of course, you should always remember that, as a 'secured' loan, your home may be at risk should you not be able to keep up with the monthly repayments. Therefore, it is imperative that you are sure that your income is sufficient to allow you to make the repayments comfortably and that you consider a payment protection insurance policy so that, if the unexpected should occur, like redundancy or illness, for example, the insurance company will continue to make the repayments on your behalf for a determined period, until you are able to resume making the payments yourself. Potential customers can sometimes be wary of secured loans as they think that their homes can be repossessed, should they run into difficulty with repayment.
Lenders are aware, however, that finances do not run smoothly all the time so they will, more often than not, take the long-term view that and allow some leeway should you experience a temporary difficulty, since, ultimately, they have the security of knowing the property is there as collateral. However, payment protection insurance is well worth considering for additional peace of mind.
For more information, it is highly recommended that you seek advice from a specialist secured home loan expert and/or an independent financial advisor before taking out a secured loan.
Benefits of the secured loan option
In addition to the lower rate of interest that you will enjoy, a secured loan will usually allow you to borrow more money for more expensive renovations and over a greater period of time in which to repay it, making it highly attractive to home owners looking to make major improvements to their property. Depending on the amount of equity in your property, you can expect to be approved for a loan of between £3,000 to £75,000 (and sometimes even more) over a repayment term of 3 to 25 years.
Lenders will always prefer the option with security, hence less risk for them and lower interest rates for the customer. As the secured loan is always backed with collateral, i.e. your property; most lenders will approve loans, even in cases of CCJs, defaults and arrears. This makes the secured loan option also available to a large number of people who wouldn't normally qualify for a personal unsecured loan from their bank. In certain cases, those people with an exceptional credit history and who are of good financial standing can expect amounts ranging up to 125% of their property value.
In some circumstances however, lenders may only initially offer a secured loan for a certain proportion of your home improvement project. Usually, once that has been successfully completed, adding equitable value to the property, they are more likely to make further cash available for completion of your renovations or refurbishments.
A secured loan for home improvements makes great sense for two main reasons:
Home improvements can be a good investment
Firstly, it releases the equity that would otherwise remain dormant in your property, letting you utilise the capital that has been freed up which would have remained untouchable.
Secondly, by freeing up the equity in your property, home improvements should also increase the value of your property if you ever choose to sell it in the future and, thus, will also increase the equity in your property further. So, a secured loan not only gives you lower interest rates, it is also a good financial investment in the long-term, adding value to your property whilst, at the same time, allowing you to experience the additional home comforts now.
With Secured Loan UK .com, no matter whether you're Status or Non Status, being a Homeowner means we can get you a competitive rate that matches your credit history.
All you have to do is complete our Secured Loan Application Form and let us give you a FREE and NO obligation quote.
