Home Improvement Loans

How to choose a home improvement loan...

If you want to 'keep up with the Jones's', but have no money to do so, a Home Improvement Loan could be the ideal way to get the cash together.

Home improvement loans can pay dividends, as the right project could not only boost the appeal of your home and the quality of your living, but also add thousands to the value of your property.

These loans are good for:

Increasing property value
If you choose the right improvements then you could add, not just thousands, but tens of thousands of pounds to the value of your home. It is, however, important that you pick your projects wisely to reap the rewards.

Projects that add extra living space to your property are likely to be the most rewarding in terms of future value, however, there are also likely to be the most costly to finance. Small redecorating projects may be a hassle, but they are cheaper and are likely to boost the general look and feel of your property.

When choosing your project, ensure that you take into account the impact on your life, during and after, the completion of the work.

For example: A new kitchen may be a great improvement to your property, increasing your enjoyment of cooking and the look of your home, but it is probably not a good idea to do the work over Christmas!

Various financial situations
As these loans are available in both secured and unsecured format they are accessible to a wide range of applicants from a variety of different financial backgrounds.

These loans are unsuitable for:

Unskilful DIY enthusiasts
The quality of the improvements made will not only dictate the amount of money they recoup, but also your living standard. A bodged kitchen will be as troublesome and unusable as it is unsightly.

Despite television shows telling you otherwise, aside from a bit of painting and decorating, you shouldn't attempt to undertake large projects, especially structural changes, unless you are a trained professional.

Look for:

The best deal
You may be eager to get on with your projects, but before you get underway, make sure you are getting the best deal possible.

ChooseMoney recommends comparing at least 3 companies before you make a final decision.

Look for the best rates of interest and whether or not the rate in question is:
Fixed: This means that the APR you are offered will remain the same throughout the duration of the loan.
Or . . .
Variable: Meaning that the rate in question will rise or fall in line with the Bank of England's base rate.

Watch out for:

Dealer finance
Many people eager to get on with their projects opt for financial plans offered by retailers at the time of purchase.

Do not fall into this trap! The payment packages that retailers offer are never as good as some of the home improvement loans currently available. Billions of pounds are wasted in interest this way every year; not to mention that any extra cash you spend will wipe out any property value increases you planned on achieving.

The average APR for dealer finance can be around 15%, double the rate offered by some of the most competitive lenders. Don't fall into the trap; make sure you look for the best rates available.

Don't forget:

You can make the money back
Home improvement loans are one of the few loans that you hope to regain, at least some, but hopefully much more, than you initially borrowed.

Draw up a plan of the estimated costs for the work and get an estate agent round to give you an appraisal of current value and potential future value after any planned work is completed. This should help you gauge what projects are worth doing and which ones are best left alone.

Compare home improvement loans