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Last updated: 05 January 2023
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Coming soonYes - much like you can take out a wedding loan or a holiday loan, you can take out a loan to assist you in paying for some much-needed home improvements.
A home improvement loan is pretty self-explanatory; it is a loan someone takes out to help fund home improvements or renovations, such as a new bathroom, kitchen, or home extension.
Taking out a home improvement loan is a viable way to help some people improve the value of their home, or give their home a revamp, without having to pay for all the work upfront.
Its quite simple to do on usave.co.uk.
We recommend someone only ever take out a home improvement loan if they are adamant they will be able to repay it; don't take out debt if you will be unable to keep up with the monthly repayments.
See what loan rates are available at the moment
Coming soonSecured loans are loans taken out which are secured against an asset, most typically your home. This is also known as a home equity loan.
These loans are often long term loans and usually for larger amounts of money. They are called ‘secured' because they give the bank or the building society the ability to repossess your house or other valuable asset is you fail to make the monthly payments.
However, this means lenders have the ability to offer lower interest rates over a longer period as they see them as low risk.
Personal or ‘unsecured' loans are simple and quick loans taken out with a lender with a pre-approved payment plan.
These are often short term loans, for a smaller amounts of money, and do not require you to put your house up as collateral.
They are commonly referred to as personal loans because they are for your own personal spending and therefore do not have to be for a specific project.
These loans are generally used by people with a good credit rating looking for small sums of money.
They key thing to consider when comparing home improvement loans is how much money you will need to get the job done. Usually, the maximum amount that can be borrowed unsecured is £25,000.
Your credit rating will help determine how much you can borrow.
Those with higher credit ratings are much more likely to be able to get a large, unsecured home improvement loan.
There are three different credit rating agencies and different lenders use different ones, so if you get rejected from one that doesn't mean all hope is lost!
If you compare home improvement loans with usave, we will search through loans from a range of lenders across the market to help find you a personal loan that suits you without affecting your credit score.
Both unsecured and secured loans can either have fixed or variable interest rates and it is therefore important to make sure you know what type of loan you interested in.
A variable interest rate means that your monthly repayments can change, whereas with a fixed interest rates your payments stay the same.
Unsecured personal loans are usually quicker to take out, and often have short-term repayments but available dependant on your credit rating. This type of loan is usually more suited to those with good credit looking for small improvements, but the interest rates tend to be higher.
Secured loans are usually taken out over a longer term with larger amounts of money, but are riskier because your lender has the ability to take the asset which you secured the loan against. A secured loan is therefore more suited for a larger home improvement project or if you have a bad credit rating.
The risk in securing your current property against a loan, should not be underestimated. You should always compare loans and your different options thoroughly before taking on a secured loan.
This really depends on you and your personal circumstances!
A home improvement loan can be a good idea, but only if you can afford it.
Before you take out a personal loan for home improvements, you should assess:
Borrowing money is something that should not be taken lightly; only borrow money you know you are able to afford and will help improve your circumstances in the short and long term.
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