Homeowners are prone to property envy, whether they are visiting friends’ houses or flicking through pictures on Pinterest. That is why many Brits dream of being able to redecorate their property and design it just the way they would like.
However, large-scale renovation projects can cost a lot of money, which explains why many people who are able to transform their homes are those in their 50s and 60s, whose children have fled the nest and are mortgage-free.
Indeed, recent figures from SunLife revealed the most popular cause for considering equity release is to be able to update their properties, with 24 per cent of those between 55 and 64 citing this as the reason.
Those who are not in the position to release equity in their homes yet – because they have not finished paying off the mortgage or do not have enough value in their asset – need to think of alternative means of acquiring finance.
One of these is applying for a home improvement loan – but it is essential to find out all the information to make sure it is the right option for you.
Home improvement loans certainly have their advantages. They enable homeowners to afford their DIY projects without years of saving, with unsecured personal loans offering between £5,000 and £10,000, to be paid back in monthly instalments over three, five or ten years.
Those who can afford it should try and reimburse the money as quickly as possible, so they can benefit from lower interest rates.
If you require more money for your home improvement job, however, you might consider a secured loan. These offer larger sums of cash, as they are secured against the value of your property.
While you will be able to access a substantial amount of money, you risk losing your house if you are unable to pay the monthly instalments. There is clearly a much greater risk attached to this form of finance, as your property could be repossessed if you default on the re-payments; however, most people take them out with confidence that their home improvement project will boost the value of their house considerably.
Indeed, you could earn back the money you spend on the update or even make a profit if you are able to increase its value enough and sell the property.
Alternatively, if you are able to make such substantial improvements to the house, you might not have to move, saving yourself a lot of money in moving costs, including stamp duty, solicitor’s fees, and removal company charges.
However, it is important to think carefully before taking out a large loan. Not only is it essential to read the terms and conditions carefully, you need to ensure you will be able to make the re-payments, otherwise you risk losing your asset entirely.
Of course, you do not need to spend a fortune to improve the look of your home, as simple changes can have a big impact. For instance, simply getting wood floor sanding together with painting your walls can give rooms a new lease of life.