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.
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.