Home Improvement Loans
Calculator and guide
Home improvement loan calculator
We know home improvements can be expensive, so a loan could give you the cash boost you need to make them a reality. Quickly find out what you could borrow with our home improvement loan calculator.
Based on the value of your property and the amount outstanding on your mortgage, the maximum you could borrow is £.
Representative Example for second charge mortgages UK: based on borrowing £18,000 over 120 months. Interest Rate: 6.5% fixed for 60 months with instalments of £227.38. Followed by 60 months at the lenders standard variable rate of 4.95% with instalments of £221.71. Fees Broker fee (£1,530); Lender fee (£495). Total amount payable £26,945.40 comprised of; loan amount (£18,000); interest (£6,920.40) including broker fee and lender fee. Overall cost of comparison 9.1% APRC. This means 51% or more of our clients receives this rate or better for this type of product. We have arranged borrowing with rates from 3.4% to 29% APRC which has allowed us to help customers with a range of credit profiles. We are a broker not a lender.
Second charge mortgages have a minimum term of 36 months to a maximum term of 360 months. Maximum APRC charged 29%. If you are thinking of consolidating existing borrowing you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
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Guide to home improvement loans
Making improvements to your home is a good investment as a homeowner. You can make the space a nicer place to live and, depending on the improvements you make, you could increase the value of your home. This means that if you ever sell and move on, you can recoup the amount you spent — and maybe more.
What’s a home improvement loan?
It’s exactly as it sounds: a loan that you can take out to make improvements on your home. If you’re more interested in small improvements than a home makeover, a personal loan (an unsecured loan with a short repayment term) may cover the costs. However, if you’re looking at a much larger and much more expensive project, such as an extension to your home, a secured homeowner loan may be better suited. Homeowner loans are secured against your home, which usually allows you to borrow larger amounts.
Why take out a home improvement loan?
There are many reasons why a home improvement loan could be a good option, but the most common are:
Your home needs urgent repairs or renovations, such as new roof or replacing the central heating or double glazing
You need more living space by way of an extension, conservatory, or loft conversion
Your existing kitchen or bathroom is outdated and worn out, and you want to replace your appliances
You want to increase the value of your home by making improvements before you put it on the market
Who is a home improvement loan suitable for?
Home improvement loans are suitable for homeowners looking to make improvements to their property. They’re popular with first-time home buyers, particularly those that have purchased a fixer-upper that needs some extra work.
How much should I borrow with a home improvement loan?
This depends on how much you need to fund the work you’re planning. You should also consider the following factors:
The amount of work needed to realise the project
The materials required to complete the work
The amount of equity you hold in your home
Your credit rating and repayment plans
While unsecured personal loans tend to range from £1,000 to £35,000, secured homeowner loans can unlock anything from £5,000 up to £5 million. This makes them better suited to significant renovation projects, as long as you have enough equity in your property.
Because a secured loan uses your property as collateral, the amount of equity you have in your home is a big factor in determining how much you can borrow. Think carefully before securing debts against your home, as it could be repossessed if you can’t keep up with repayments.
How do you qualify for a home improvement loan?
Qualifying for this type of loan depends on your personal circumstances, the value of your home, and the equity you hold in the property. Take the following steps to see if you’re eligible for a home improvement loan and whether it’s a suitable option for you.
A homeowner loan allows you to borrow up to the amount of equity you have in your property, which means you could borrow as much as your home is worth if you own it outright.
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1. Work out how much equity you have in your home
A homeowner loan allows you to borrow up to the amount of equity you have in your property, which is how much of your home you own outright. This can be worked out by finding out the property’s total value minus the amount that’s outstanding on your mortgage and any other loans you may have against your property.
Most lenders require you to have at least 20% equity in your home before you’re approved for a home improvement loan. This means you must own at least 20% of your home outright.
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2. Check your credit history and credit score
Even if your credit history or credit score isn’t the best, you can still qualify for a secured homeowner loan. However, if you have an excellent credit score, you’ll likely qualify for a loan at a better interest rate.
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3. Gather financial information
Lenders must ensure that you can comfortably repay your loan without causing you any financial difficulties, so they will likely carry out an affordability test. This involves analysing your income (recent payslips) as well as your outgoings.
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4. Ask for estimates from different contractors
It’s a good idea to know exactly how much the work you’re proposing is going to cost you, so you should ask a few contractors for an estimate. Shop around to get an average price and remember to include a contingency amount for larger jobs. Work like loft conversions may cost more if you run into any unexpected difficulties.
Home improvement loan FAQs
What should I consider before taking out a secured home improvement loan?
A secured home improvement loan means that the amount you borrow is ‘secured’ against your property. If you find yourself unable to make the monthly repayments on time and for the full length of the loan, the lender could repossess your home. We suggest that you don’t borrow money unless you’re certain you can keep up with the loan repayments.
What are the alternatives to a homeowner loan?
If you find that a homeowner loan isn’t the right option for you, you may consider:
- Unsecured personal loans
- Credit cards
- Selling your home and moving to a property that has the features you want
Where should I look for a home improvement loan?
A loan broker, such as Loan.co.uk, can help you discover the best home improvement loan options available to you. We’ll offer a wide range of lenders for you to compare to find the loan that best suits you.
The Best Value Home Improvement Loan
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Sinead Hennebry
“It was a pleasure to deal with Loan.co.uk for the loan for our home improvements. The team were amazing, they worked tirelessly to get us the best deal, were always available for any queries and were so efficient, friendly and made the process seamless. Even when there were issues, they went above and beyond to find solutions to ensure we were able to get the most competitive loan in the market. I would definitely recommend Loan.co.uk to anyone looking for a loan.”
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Learn more about homeowner loans
Which credit option is best for you?
7 home improvements that could add value to your home
How can I finance a house extension?
Representative Example for secured loans & Second Charge Mortgages: based on borrowing £18,000 over 120 months. Interest Rate: 7.4% fixed for 60 months with instalments of £241.40. Followed by 60 months at the lenders standard variable rate of 7.9% with instalments of £244.95. Fees: Broker fee (£1,062); Lender fee (£595). Total amount payable £31,063.20 including broker fee and lender fee. Overall cost of comparison 9.5% APRC. This means 51% or more of our clients receives this rate or better for this type of product. We have arranged borrowing with rates from 4.9% to 29% APRC which has allowed us to help customers with a range of credit profiles. We are a broker not a lender.
Secured Loans have a minimum term of 36 months to a maximum term of 360 months. Maximum APRC charged 29%. If you are thinking of consolidating existing borrowing you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.