How to Fund Those Home Improvements

Whatever scale of home improvement you are considering carrying out, it will inevitably cost money. This can be from tens of thousands of pounds for the more expensive types of home improvements such as building a home extension / loft conversion, down to hundreds of pounds for smaller enhancements such as redecorating a room and replacing a few key furniture items.

When planning your home improvements, one of the most important things to consider is the budget and how you are going to finance carrying out the work and purchase the materials and hire any associated specialist labour needed to complete the project. Firstly draw up a list of everything you need material wise, don’t forget to allow for delivery costs and try to put in some labour time frames for manual work you are not able to do yourself. Once you have the figures to hand you need to review your funding options.

Saving Money – The most cost effective way of financing your home improvements is to save the money you need, putting money aside for your project week by week. Once you have enough money to carry out the work you will be able to buy the materials and hire the tradesmen required to complete the work. The major drawback of saving the money before hand is that you will have to wait longer to carry out the work, this can be a major problem in some instances where your home improvements may be urgent.

Personal Loan – A personal loan is often available for amounts from £500 up to £15,000 making them suitable for small to medium sized home improvement projects, because most personal loans are unsecured, they may not be available to all, if you have no credit history, a low credit score then a personal loan may be unavailable or charged at a higher interest rate. For larger amounts the terms allowed are still usually restricted to a maximum of 5 years, so this may make the monthly payments too high for high cost projects.

Secured Loan / Remortgage – A secured loan is sometimes also referred to as a second mortgage, both secured loans and remortgages can be used to raise larger amounts, making them an option for financing larger projects such as home extensions or conservatories. As both these types of finance are secured on your property there are some deals available for people who may have not been able to get the finance amount they wanted unsecured, although it is important to note that these products may be more costly, due to the rate offered or by spreading the payments over a long period and can involve various lender and / or intermediary processing fees.

Stuart Johnson from First Choice Finance noted that “Any improvements that you are considering making to your property must be properly budgeted. The full cost of any improvements must be considered including the cost of any fees and interests charged on any loan or mortgage you take out to pay for your home improvements over the loan term. Any form of secured borrowing, be it from your bank or through a broker, carries the same legal implications as a mortgage so make sure you are comfortable with the payments and aware of the risks before you embark on this route. Whilst enhancing a home can have a positive impact on its value this is not a foregone conclusion and so one should embark on such projects as an aspirational expense for a quality of environment improvement. ”

People carry out home improvements for many reasons, whether it is to improve the living space for them individually or looking to add value to your property. Some home improvements may increase the property value more than the cost of carrying out the work, while others will prove to be less cost effective and will not increase your home`s value as much.  Remember that the cost of any finance must be considered for any project to be truly cost effective and property values can go up and down, as recent history has clearly demonstrated.