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Looking to Renovate Your Home? Here Is All You Need to Know About Home Improvement Loans

Home improvement, which includes renovation, landscaping, adding new kitchens and walk-in wardrobes, is estimated to add over £40,000 in property value. The past 5 years (2015-2019) have seen UK homeowners spend about £295 billion in renovating their homes.

With the average spend in home improvement in the UK at £14,015, many homeowners are looking at getting home improvement loans to finance their renovations. While buying a home is exciting if you can afford it, doing a renovation is much cheaper and makes your home a comfortable place for you and your family.

However, before you take out a home improvement loan, you must understand how the loan market is structured and who the players are. This article will shed light on this and much more.

What Is A Home Improvement Loan?

This is where it all starts, knowing exactly what a home improvement loan is and whether it is different from other loans. A home improvement loan is a personal, secured, or unsecured loan advanced to help you renovate and improve your home.  

For small improvements, you may get a short-term unsecured loan. However, for larger and more expensive renovations such as kitchen additions or home extensions, you may have to apply for a secured homeowner loan like USDA’s home repair loan. This program provides loans to homeowners with low income to modernize or improve their homes. Applicants may check the USDA map to determine if their area is eligible for this program.

Is It a Must You Take Out a Home Improvement Loan?

There are many reasons why taking a home improvement loan may be the best decision. Having said that, not every homeowner applies for a loan every time they do renovations. Some of them use their savings to fix their landscapes and interiors. Here are some of the reasons why a home improvement loan may be appropriate for you:

  • Urgent repairs or renovations: If you need to urgently fix your roof, double glaze your house, or replace the central heating system, knowing where to shop home improvement loans can help you fix the problem fast.
  • Extend Your Living Space: Probably you want to add more living space by extending your home or converting your attic to a functional room. This can be a little expensive hence the need for external financing.
  • Increasing your home value: If you want to sell your home, making a few additions can drastically improve its value. If the value to be added is more than the cost of the loan, getting a credit facility is worthwhile.

What Is the Profile of a Home Improvement Loan Borrower?

Data collected by MoneySuperMarket as of October 2019 shows that the people who take out home improvement loans are mostly first-time home buyers. Having struggled up the property ownership ladder, many of them may have ended up with a fixer-upper in need of renovation to be made into a home.

Since most first-time buyers are unlikely to be approved for secured homeowner loans until they build up sufficient property equity, many of them find instant guarantor loans attractive and convenient.

In terms of age, expect a typical home improvement loan borrower to be about 25-44 years of age. The average loan they take is approximately £4,000, which is close to half the average amount taken by folks in the 40-60 age bracket.

How much can you get approved for a Home Improvement Loan

Before you think of applying for a home improvement loan you should first get quotes from reliable home improvement contractors. Get at least three different quotes to give you an idea of how much the work will likely cost you.

Depending on your context, you can borrow anything from £1,000 to £35,000. Whether you go for a small short-term loan or a larger secured homeowner loan of up to £5 million depends on several factors including.

  • Whether the loan is secured or unsecured
  • The amount you would like to borrow
  • How quickly you plan to repay the loan
  • Your credit score
  • How much you can afford to pay in installments

Because instant guarantor loans do not use your property as collateral, but rather a guarantor who could be a friend or a family member, they are the best for first-time buyers. Immediately the guarantor co-signs the credit agreement, you can be approved for a loan of up to £15,000.

Secured and unsecured home improvement loans

It is important to understand how you would want your loan structured whether secured or unsecured.

An Unsecured Loan

An unsecured home improvement loan is a credit facility structured in the form of a personal loan that you take out intending to use the funds for home improvements. You don’t put your house or any other asset as collateral and the facility gives you latitude and flexibility around what you can use it for.

Most lenders require that you have a good credit score to access an unsecured loan and the loan amounts they advance are usually small, up to £25,000. However, this doesn’t mean that you cannot get a home improvement loan with bad credit. You could apply for instant guarantor loans and get approved even with bad credit.

Secured Loan

This is a home improvement loan taken out against collateral which could be your home equity. Typically, secured loans have longer terms and lower interest rates compared to unsecured loans. Depending on your financial situation, expect to be approved for amounts ranging from £30,000 – £100,000.

What Are the Benefits of Home Improvement Loans?

There are several reasons why a home improvement loan will work for you. Here is a quick summary.

  • Quick Access to Funds: Within a couple of days after being approved, the funds will be credited into your account. This means you can immediately begin working on your home.
  • Fixed Interest Rates: If you apply for a secured loan, you may enjoy fixed rates meaning predictability in your monthly repayments.
  • Flexible Loan Terms: You can choose the loan term that fits your profile. Most lenders offer loan terms stretching from 1-5 years.
  • Larger Loan Amounts: Compared to other avenues such as credit cards and payday loans, home improvement loans are much bigger with some stretching up to £100,000.
  • Flexible Use: While a lender may want to know the exact use for which you are seeking the loan, most personal home improvement loans can be put to a variety of use including personal spending.


Home improvement loans are the best bet for homeowners looking at renovating their homes. As long as the cost of the loan is lower than the perceived value addition of the renovation, it is economically feasible to take out the loan. Having said that, you need to check on the interest rate charged, origination fees, and whether you qualify at your current credit score.

If you have bad credit and feel that going for the mainstream home improvement loan is challenging, check out instant guarantor loans from credible lenders.

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