Thinking about converting your loft? If so you might be wondering whether you can get a loan to help you fund your project.
Well, you’re in luck, as this blog covers everything you need to know about loft conversion finance...
How much does a loft conversion cost?
Generally speaking, these projects can cost anywhere from £15,000 to £80,000. It is dependent on the size of the project and the type of work required.
One of the biggest factors that can influence the costs is whether you are carrying out the renovation yourself or if you are getting help from a professional.
If you’re worried about how to fund the project it could be worth speaking with a loan provider.
Will a loft conversion add value to my home?
Converting your loft can increase the value of your property. In fact, any type of renovation or improvements you complete can increase your home’s value.
However, the size of the increase can be dependent on the type of room it is being converted into and how big the space is.
Research by property price advice states that loft conversions can add up to 15 percent to your property value.
So if you want to convert this space it could be a worthwhile investment, which might outweigh the costs involved.
Are there loans for loft conversions?
Funding a loft conversion can be achieved in several ways. This could include using your savings or taking out a home improvement loan to help you.
Savings –
Although it is not a loan, one of the best ways to finance loft conversions is using your savings. By doing this you will not be charged any interest, which means it can be a much cheaper option.
To add to this, you can get started on the project right away, as you are not having to wait for a loan application to be approved.
Therefore, if you can cover the costs with your savings it could be a good idea to use this method.
Unsecured loans –
Not everyone will have savings to cover these costs, in which case a loan may be needed. An unsecured loan could be a suitable finance option to use in this instance.
With this option, an asset is not taken as security against the loan. This means it can be a less risky option for borrowers and could be quicker to get than other borrowing solutions.
However, loan sizes are usually smaller and lenders may be stricter with their qualifying criteria.
Due to this, an unsecured loan may only work if you need to borrow a smaller amount of money. Any projects that need larger loan sizes may need an alternative finance option.
Secured loan -
A secured loan can be helpful if you need to raise a much larger amount of funding for your project.
With this option, a property is secured against the loan, meaning that lenders can repossess it should you fail to keep up with monthly repayments.
Although this may feel risky, it does unlock larger loan sizes and better interest rates compared to unsecured options.
Projects that require a more substantial level of funding may be more suited to this type of loan.
What are the interest rates on loft conversion loans?
Interest rates can be influenced by several factors, so the best way to find out is to speak with a loan provider.
Some of the factors that can impact interest rates include:
- Type of loan;
- The lender you have selected;
- Your circumstances (such as income and credit history).
How easy is it to finance a loft conversion?
Getting a loan to help you fund these projects can be easy. However, this does depend on the type of finance option you are looking to get and how complex your situation is.
Additionally, some lenders can be stricter than others, which can influence how easy it is to get accepted.
Before applying it could be worth getting a decision in principle from your loan provider. This will help you understand how much you will be able to borrow and whether you will get accepted.
How do you apply for loft conversion finance?
Applying for these options can be broken down into three quick and simple steps:
- Locate a lender, bank or broker you would like to use and submit an enquiry.
- Next, the provider will search their database to find you an affordable product.
- Finally, you will talk through the option with your provider and decide whether it is right for you. If it is they will get your funds arranged, so you can start your project quickly.
Summary
Converting a loft is an exciting project that can boost the value of your property. Financing these projects can be achieved by using your savings or by taking out a loan. The type of loan you can get may be influenced by the size and cost of the project. So it is worth researching your options carefully to understand what the right path for you is.
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.
