Guide to home improvement loans

Want to improve your home, but don’t have the cash? Find out if a home improvement loan is the right solution for you

Making home improvements can provide you with a win-win situation. Firstly, by improving your home you’ll make it a nicer place to live. Secondly, depending on the home improvements you make, you could increase the value of your home. So, if you ever decide to move, you could re-coup the amount you spent and more besides. So, a secured loan used for home improvements could turn out to be a great investment.

What’s a home improvement loan?

It’s exactly as it sounds: a home improvement loan is a loan that you can take out to improve your home. If you’re looking to make small improvements such as a home makeover, a personal loan may cover the costs. But for larger, more expensive improvements such as an extension, a secured homeowner loan may be more suitable.

Why take out a home improvement loan?

There are plenty of reasons why you might want to take out a home improvement loan, but here are just a few suggestions to get you started:

  1. Your home may require urgent repairs or renovations, from a new roof to replacing the central heating or double glazing
  2. More living space is needed with an extension, conservatory or loft conversion
  3. The existing kitchen or bathroom look tired or worn and you’d like to replace them with something more luxurious
  4. Increase the value of your home before you sell it

What type of person takes out a home improvement loan?

According to Moneysupermarket data,(1) home improvement loans are particularly popular with first-time buyers. This might be because they’ve worked hard to make it onto the property ladder and are quite likely to have purchased a fixer-upper that needs work to turn the property into a home. Or, perhaps they feel they’d like to project themselves onto the home to ‘make it theirs’. It’s unlikely for first-time buyers to get a secured homeowner loan straight away as they need to build up equity in their property first, but, they may well be eligible for a personal loan.

Because they’re most likely to be first-time buyers, the type of person that takes out a home improvement loan is likely to be a house-proud 25-44 year old. Despite this relatively youthful age range, this type of loan is the loan of choice for the highest average earners who are looking for a loan.

So, if you’re a 25-44 year old who’s a first-time buyer, don’t be surprised if you suddenly feel the urge to take out a home improvement loan to make the most of your existing property.

How much can I borrow with a home improvement loan?

If you’re planning home improvements, get quotes from at least three companies to see how much the work is likely to cost. As you’d expect, younger home improvement borrowers tend to take out a loan for around £4,000, but those in the 45-64 year old range often borrow much more with an average loan of around £9,000.(2)

At depending on your circumstances, you could take out a personal loan from £1,000 to as much as £35,000.

But if you want to make major, expensive improvements, or if your credit rating isn’t the greatest, your best option may be to take out a secured, homeowner loan. Again, depending on your circumstances, you could take out a secured loan for £5,000 to £5 million. That’s an awful lot of laminate flooring.

Because a secured loan uses your property as collateral, one factor that will influence the amount that you can borrow will the amount of equity you have in your home. That’s the amount of the value of your home that you own, free and clear of what you owe on your mortgage. A loan broker will be able to help you work out the best options for you and your circumstances. At we can also make this process very easy, check your credit score, arrange the property valuation and secure your new loan providiting you are eligible.

What should I consider before taking out a secured home improvement loan?

With any loan that’s secured on your home, you have to be sure that you’ll be able to make all the repayments on time and in full for the length of the loan. If you don’t feel you’ll be able to keep up with extra loan repayments, you shouldn’t consider borrowing money.

What are the alternatives to a homeowner loan?

Well, you could just put up with the way your home is at the moment, or sell it and move to a home that already has all the features that you want. If this is the case you’ll probably need a mortgage. Alternatives include unsecured, personal loans and credit cards but bear in mind the interest rate can be a lot higher than for second charge loan.

But if you want to make major, expensive improvements, or if your credit rating isn’t the greatest, your best option may be to take out a secured, homeowner loan.

Where should I look for a home improvement loan?

The great news is that you’re already in the right place, because a loan broker such as will be able to help you to discover the best home improvement loan options for you and your circumstances from a wide range of lenders.



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