Home improvements help make the most of your property. Whether it’s an attic conversion, extension, a new kitchen or simply redecorating. It’s a great way to increase the value of your property.
Of course, improvements can be very expensive. Saving up isn’t always an option for homeowners – especially if you have a growing family. That’s where a home improvement loan can help.
A home improvement loan can help you make important changes to your property and spread the cost over months or years.
Loans can also come in use if there is sudden, uninsured damage to your property. There are options that allow for quick approval from lenders, without a poor credit rating having an impact.
Home improvement loans are not limited to just property owners. Some lenders also offer opportunities to tenants. This can only take place with the approval from a landlord before applying.
Four main loan options are available to help fund your home improvements.
Personal loans are the high street option. However, if you have a bad credit history, they are often unlikely to be approved. Your score could also potentially be harmed further by a hard search for an application if you aren’t eligible for it.
Payday loans provide fast approval and finance for short-term periods, making them popular options. More often than not, they also come with very high APR percentages. This means potentially high repayment costs.
Secured loans are usually approved quickly. That’s because an asset, such as a house, is used as collateral on the loan. The issue is that failure to keep up with repayments could result in losing that asset. It is not an option to be taken lightly.
Guarantor loans are a popular and accessible option for those with a poor credit history. It requires a guarantor to step in and make repayments if you fail to do so. It is a loan system built on the trust of close acquaintances.
A home improvement loan could fund a new project, but is repaid over a period of time.
With a personal loan, having a poor credit score will likely prevent you from securing needed finance. A guarantor loan, however, does not stop you from being granted funds due to your credit history.
When compared to a secured loan, your property isn’t used as security for repayment. Therefore, there is no risk of losing your home.
A guarantor home improvement loan may be available for up to £10,000, which could be used for a number of projects.
There are a number of ways that a home improvement loan could result in an improved credit profile.
By budgeting correctly for each month, you should be able to stick to your repayments on time and in full. This financial behaviour should see your credit score increase over time.
If you are able to repay your loan earlier, you will be charged less interest over all. This could put you in a stronger financial position, while earlier repayment of your debt can lead to an improved rating.
As a guarantor, there are certain factors you must be aware of before coming to a decision.
Home improvement can involve significant amounts of money. So, you need to consider whether the borrower is likely to meet the repayments. Otherwise, the responsibility will fall to you.
It is also important to consider your ability to afford payments on the loan if they can’t – and whether doing so could harm your relationship.