If you're planning significant home improvements and need a large loan to cover the costs, you might be asking yourself, is this possible? The good news is that it may be possible.
In this blog, we’ll walk you through whether you may be able to get a large home improvement loan and how to prepare for the process.
Can you get a large home improvement loan?
Yes, it is possible as long as you meet the lender’s requirements. This is good news if you’re planning a big project and need financial help to make it happen.
Types of loans for home improvements
Personal loan or unsecured loan
One option is a personal loan, also known as an unsecured loan. With this type of loan, you don’t have to put your property up as security, making it a lower-risk option for you. However, because it’s riskier for the lender, they typically lend smaller amounts, often up to around £20,000. This might be ideal for smaller projects, but if you’re planning extensive renovations that require more funding, this may not be the right choice.
Further advance
A further advance is another option where you borrow more money from your existing mortgage provider. Since you already have a relationship with the lender, this can sometimes be a better way to fund your project. Additionally, it can also be more cost-effective. However, the downside is that lenders may restrict the loan amount or terms, meaning it may not always be enough for larger home improvements. If you need more money or a longer repayment period, you might need to consider other options.
Secured loan
A secured loan is where you take out a second loan against your property, in addition to your existing mortgage. By using your property as security, the lender faces less risk, as they can repossess the property if you fail to make repayments. Because of this, lenders are usually willing to offer larger amounts over longer terms. If you’re looking to make major renovations, this could be an option for you. Usually, this solution is considered when other options, such as a further advance or unsecured loan, either don’t provide enough funds or you’ve been declined.
Types of home improvements that may need a large loan
Major renovations
If you're planning a full remodel or structural changes to your home, like adding new rooms or extensions, this can be very expensive. Major renovations require a lot of materials, skilled workers, and time to complete. Because of this, they may have larger costs.
Outdoor projects
Home improvement projects that involve landscaping, adding a driveway, or building outdoor features like decks or patios can also get costly. These types of outdoor projects often involve significant work and materials, and can sometimes need more money depending on the size and complexity.
Upgrading systems
Upgrading major home systems like electrical wiring, plumbing, or your heating systems can be expensive. These upgrades are often necessary to keep your home running smoothly, but they usually involve professional help and the costs can add up quickly.
Energy efficiency projects
If you want to install solar panels or replace old windows with energy-efficient ones, these projects can also require a significant investment. While they can save you money on energy bills in the long run, they often come with high upfront costs.
How to plan for getting a home improvement loan
1. Figure out how much money you need
Before looking for a loan, you need to know exactly how much money you’ll need for your project. Start by making a detailed budget for your home improvement. Break down each part of the project—like materials, labour, and any extra costs—to get a clear picture of what the total cost will be.
Using online loan calculators can help you figure out what the loan monthly payments might be, so you can see if it fits within your budget.
2. Consider using any savings you have
If you have savings set aside, using some of them to cover part of the project can lower the amount you need to borrow. While it's not always realistic to pay for everything upfront, contributing what you can will help. Since loans come with interest on top of the principal amount, reducing the total loan amount will benefit you in the long run.
3. Shop around for the best loan
Once you know how much money you need and how much you can contribute, it’s time to look at loan options. There are different types of loans you can choose from, such as personal loans, further advances or secured loans. Each type of loan has different terms and features, so it’s important to research carefully and compare interest rates, repayment schedules, and any extra fees before choosing.
Make sure you understand all the details of the loan before agreeing to anything. You want to make sure the loan is affordable and doesn’t come with hidden costs that could make it harder to pay off.
4. How to pick the right loan
Choosing the right loan depends on your specific needs and situation, so only you can truly make the decision. However, there are a few key things to consider when looking at the different loan options available. It’s important to check the interest rates, repayment terms, and any extra costs associated with each loan. Doing your research will help you fully understand each option before you move forward.
Summary
If you're planning major home improvements, you might be considering a large loan to help fund the project, and the good news is that it could be possible. There are different loan options, like personal loans, further advances, and secured loans. Each has its own pros and cons, so it’s important to understand these to make the right decision for you.
Before applying for a loan, take time to plan your budget, think about any savings you can use, and compare different loan options. Look at things like interest rates, repayment terms, and any extra costs to make sure the loan is affordable for you.
Loans are secured against property. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Be aware that consolidating debt could extend your repayment term and increase the total amount you pay over time.
