If you have ever made home renovations or remodels, you already know that having even minor changes can be pretty expensive. You can ensure that your project doesn’t put too much stress on your finances by taking a home improvement loan. This is a personal loan precisely tailored to cover home renovation costs. Factors that help determine if a home improvement personal loan is the right choice to go for include the rate of interest it has and any associated fees. You need to compare the home improvement loan plan that your lender offers with other available financing options to know which is more affordable. To make the comparison, you can use review sites such as Britainreviews.co.uk to look at a list of loan companies in UK. Avoid negatively reviewed companies. This article helps the reader to understand home improvement loans better.
Understanding a home improvement loan
A home improvement loan refers to a personal loan that is utilised to finance home repairs and renovations. The loan can be used for big projects, including building a garage, bathroom, and kitchen remodels, installing a swimming pool, and refinishing a basement. They can also be utilised for emergency repairs and minor jobs, including outfitting the home with new solar panels or windows. Some of the home improvement loan lenders offer these loans distinctly from their other personal loan offering. Some of the major features of home improvement loans include;
- They have high rates of interests that secured loans: Just as is the case with other unsecured loans, home improvement loans tend to have high rates of interest than secured loans such as home equity loans in which the home is the collateral.
- Doesn’t need collateral: Home improvement loans, just as a majority of personal loans aren’t secured. This means that since no collateral is required, your property isn’t at risk if you cannot make payments.
- Fast, lump-sum funding: It’s possible to get a home improvement loan processed in just a day to three, and the amounts of the loan can range from €1,000 to €100,000.
- Fixed monthly payment and APR: Typically, home improvements loans have fixed rates of interests and monthly repayments for a defined number of years. This helps one to budget accordingly as they know the amount that the loan will cost them.
Which type of loan would be the best for home improvements?
There are various types of loans such as secured, personal and guarantor loans. A common question is which option is the best to finance home improvements? Typically, it is dependent on the amount you need to borrow and the nature of your finances. The pros and cons of each are set out below.
Secured loans
| Pros | Cons |
| If you have a low credit score, it is more easy to get a secured loan than a personal loan | You risk losing your home when you fail to make repayments |
| Allows for borrowing of large amounts of up to about €100,000. Such amounts will be beneficial, especially when it comes to major renovations | The value of your property will limit the amount that you can borrow |
| It may take longer to pay back the loans | Typically, it’s not possible to borrow less than €5,000 |
Personal loans
| Pros | Cons |
| It doesn’t require using your home as a security | To get the best deals approved, you’ll need to have a good credit score |
| It permits the starting of repayments after some few months as opposed to immediately | Small loans have high-interest rates |
| Allows borrowing of small amounts even as low as €1,000. This will help if you need just to make minor improvements to your home | It may not be possible to borrow huge amounts |
Guarantor Loans
| Pros | Cons |
| It’s not a must you use your home as the security | It may not be possible to borrow huge amounts |
| A guarantor will help your loan get approved if you’ve got a bad credit | You have to look for a suitable guarantor |
| If you are not able to pay the debt, your guarantor has to pay it, which can put you in a difficult circumstance |
How to select a home improvement loan lender
Different lenders will offer hugely varying fees and rates of interest. Some also close on loans quicker than others. Generally, you should look for the following.
- Positive reviews: Look at reviews for lenders offering personal reviews at Britainreviews.co.uk. one major characteristic of a reputable lender is that they have lengthy track records.
- Low APR: to get low rates, you need to have excellent credit.
- No fees: Certain lenders will not charge on their home improvement fees. Aiming for such will be highly beneficial. This may mean that you may be in a position to avoid origination fees, prepayment penalties and late payment fees.
In conclusion, with this article, the reader can understand home improvement loans better, know their advantages, compare them with other loan types, and thus make an informed decision.