*Representative Example £3,000 over 3 years, representative 48.9% APR fixed. Monthly payment £145.17. The interest is 10% per annum fixed and service fee is 30.48% per annum fixed. Interest payable £549.95 and service fee payable £1,676.17. Total repayable £5,226.12
Whether you own your property, you rent or you have a room in a shared house, making it your own is an important part of settling in. Your home is the place you go back to each night and is an environment where you should feel comfortable and safe. When things need doing in order to make you feel at home, from large improvements such as window replacement to simply buying soft furnishings and giving it a lick of paint, it can be frustrating and hard to relax, which is precisely what a home should be – a place to relax and feel settled. So what can you do when you’re keen to make improvements but you’re not sure how to go about funding it? A home improvement loan could be just the answer.
Taking credit to fund home improvements, whether it’s structural improvements to an owned property or superficial decorating in a rented one, is something that many people do. It allows you to spend a decent amount of money on making your interior and exterior design dreams a reality without having to worry about fronting the cash all at once. As with taking on credit to cover other expenses, like buying a new car or going on a much needed holiday, you’ll pay back the money in instalments, which makes it easier to manage and will spread the cost over a longer amount of time.
Home improvement loans can be taken out for almost anything – the key to working out whether it’s worth borrowing the cash is how it will affect you personally. If improvements you want to make will add value to your home over and above the full amount you’ll be paying back and the instalments are all perfectly manageable, then this would be deemed a sensible way to borrow. If you rent your home and have been given permission to decorate/add your own touches, then the benefits to you could be more personal, as you’d be making a comfortable place for yourself. The benefits of this should not be discounted. Of course, home improvement doesn’t always have to mean replacement windows and new furniture. Improvements as diverse as garage door replacement, loft conversion and landscaping the garden are all options too.
The amount you can borrow for home improvement should not be your main concern. Instead, you should look at how much you should borrow. This is an important rule that many people fail to follow – just because you can get a certain amount of cash from a lender doesn’t necessarily mean you should – it’s all about finding a balance. As an example, you could borrow up to £5,000 with a guarantor loan – a popular choice among many households.
Firstly, you should look at your household income vs your outgoings. If you don’t have full control over your finances, then you may miss important payments without realising, or fail to get the most from your money by having it in the wrong type of account. Working out how much money you have left each month after paying for the essentials (rent/mortgage payments, insurance premiums, debt payments, utility bills, food and car costs etc.) is essential if you’re going to be adding in an extra payment each month to cover the cost of your home improvement loan. In all likelihood, the lender you deal with will want a full breakdown of your monthly expenses to help them to see if the loan is affordable. This is industry best practice and something that you shouldn’t shy away from – lenders who do not perform these checks may not be acting with your best interests at heart, and you may find yourself in financial bother further on down the line. This is always something to be avoided.
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Other types of lending include credit cards, instalment loans and bank loans, among others, which each have their own pros and cons. Finding a lender who will lend you the amount you want based on your credit history and income/outgoings and allow you to pay it back in a manageable way is the key to success when it comes to borrowing money. This way, you won’t find yourself in a sticky situation further on down the line where you’re forced to borrow more in order to keep making your debt payments.
Home improvement loans can come from anywhere – the trick is finding the best type of lending suited to your circumstances. Guarantor loans are a popular choice with those who have a less than perfect credit history, as they can give the opportunity to build up a better credit rating as well as borrowing more money than you may be approved for elsewhere. This is because a guarantor is needed to vouch for the person borrowing the money. They’ll agree to make any payments which are missed, so it adds an extra layer of security for the lender. As it’s such a trust-based situation, parents, siblings, other close family members or special friends are popular choices for guarantors. Some guarantor lenders, like, will also accept partners as guarantors – so if your significant other has a better credit history than you and would also find the loan affordable based on their individual income, then this can be a viable option.
Think about what improvements you actually want to make and try to work out how much this will cost you. Remember, if you want to make some big changes, it may be worth taking your time and asking a handful of contractors to give you a quote. Always ensure these quotes are free and no obligation or you could be stuck with a bill you don’t really want to pay. Once you’ve costed out how much you’re likely to need, then it’s time to think about what you should be borrowing to cover the cost. Please note: if you rent your home from either a private landlord or the public authority, then you may need to gain permission before you make any changes to it.
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