Not only can home improvements make your home more comfortable, but they can also add monetary value to your property. Before you begin a project, it’s very important that you draw up an accurate budget. In this way, you won’t borrow more than you need and pay too much in fees, or run out of money before the project has been completed. The cost of your home improvement depends on what you do, the size of the room, the type of materials used and the labour costs. In this article we look at:
- Your options for funds to improve your home
- Home improvements loans
- Borrowing more on your mortgage for home improvements
- Writing off home improvements
How can I get the money I need for home improvements?
Ideally, it would be much better to use savings to make home improvements, but this isn’t always possible. If you decide to borrow, you have a number of options depending on the total cost of the work being done.
If the estimated costs are only a few thousand pounds, the cheapest way to borrow might be to use a 0% credit card. This is only the best option if you can afford to pay back the money during the interest-free period. The added benefit of using a credit card is the protection from Section 75 of the Consumer Credit Act.
Getting a home improvements loan
If you need to borrow more than you can afford to repay by credit card, many High Street lenders offer a home improvement loan which might be unsecured or secured and have a variable or fixed interest rate. The rate you’ll pay depends on factors such as your income, pre-existing debts and credit record.
Secured home improvement loans are secured against the property and therefore, you’ll be allowed to borrow more and at a lower interest rate. However, it’s much riskier than an unsecured loan since your property could be repossessed if you default. Such loans vary in size, but are most commonly for sums of £5,000-£50,000, and the loan term is usually for 1-7 years. However, the longer the term, the more your borrowing will cost.
Home improvement funds questions
If you are looking to do home improvement, then funding via a personal loan might be the most suitable choice for you, depending on the required loan amount. While personal loans have a fixed term from one to seven years, giving you great flexibility with the amount that you can borrow and the repayment term, they usually come with higher interest rates.
While this used to be the case, you are no longer able to receive a grant from the Government for double glazing. In order to get double glazing, you would have to finance this yourself. However, many companies offer a variety of finance options to help make double glazing and home renovation more affordable.
You could qualify for a boiler grant through the ECO scheme which is provided by the Government. However, there are certain state benefits that you must already be receiving and additionally meet specific criteria in order to qualify. Most importantly, you must already be on mains gas supply, and the boiler you are looking to replace should be five years or older. Moreover, you must be the owner of your home, and funding is unavailable to residents of council owned property or privately rented homes. Otherwise, you may wish to consider alternative options for funding your home renovations such as with a home improvement loan.
Can I borrow more on my mortgage for home improvements?
If you wish to borrow more on your mortgage for home improvements, you have three options: a further advance, remortgaging your home or equity release (for over 55s generally). All are treated like new mortgage applications so you should speak to a financial adviser to fully understand all the implications.
If you wish to borrow more on your mortgage for home improvements, speak to a financial adviser to understand all the implications.
A further advance is cashing in equity from the property with a loan from the same lender who financed your original mortgage while remortgaging involves shopping around for another lender and releasing some equity by taking out a larger mortgage.
Can I write off home improvements?
Secured personal loans and any lending linked to your mortgage can’t be written off since you risk losing your home. Although an unsecured loan isn’t directly linked to your property, it’s possible for a lender to apply for a charging order through the courts and have the loan added to your property. Such defaults, however, will be extremely damaging for your credit score and any future borrowing.