Planning home improvements? Here's how a loan could help

Whether you're dreaming of a new kitchen, creating extra space, or making your home more energy efficient, home improvements can be an exciting investment in your property.

Renovation projects sometimes come with big costs and knowing how to fund a home renovation can be difficult. If you're not able to use savings, a home improvement loan could help you spread the cost over time and make funding improvements easier to manage.

What is a home improvement loan?

A home improvement loan is a type of loan that can be used to fund work on your property. With a home improvement loan, you can typically borrow a fixed amount and repay it over an agreed period in monthly instalments.

Why do people take out home improvement loans?

Many people take out home improvement loans to spread the cost over a series of monthly repayments. You can use the money you borrow to improve how your home looks, feels or functions.

Common home improvements include:

• fitting a new kitchen or bathroom
• building an extension
• converting a loft or garage
• updating windows and doors
• adding insulation or energy-saving improvements
• redecorating multiple rooms
• landscaping outdoor spaces

Types of home improvement loans

The type of loan that's right for you will depend on how much you need to borrow and your individual circumstances.

Unsecured personal loans

Unsecured personal loans are often suitable for smaller and medium-sized projects and come with fixed monthly repayments, making it easier to budget. With this type of loan, you do not need to use an asset, like your home, as security.

Secured homeowner loans

Homeowner loans are often suitable for larger projects. With this type of loan, you may be able to borrow larger amounts or spread repayments over a longer period because you use your home, as security.

It’s important to understand the risks involved with secured loans. Your home could be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

How much should you borrow?

Before applying for a loan, it’s a good idea to have a clear budget to help you understand how much you may need to borrow.

It’s important to consider things like:

• the cost of materials
• labour and contractor fees
• planning or building regulation costs
• furniture and finishing touches
• extra money for unexpected expenses

Things to consider before applying for a home improvement loan

Before taking out a home improvement loan, ask yourself these questions:

Can I comfortably afford the repayments?

Consider whether any monthly repayments would be affordable and fit within your current budget. It's also important to think about whether you could manage repayments if your circumstances changed, for example if your income reduced or your household expenses increased.

What's the total cost of borrowing?

It's important to understand the total cost of the loan, not just the monthly repayments. Depending on the length of your loan and interest rate, the total amount you repay could be higher than the amount you borrow.

Have I compared different lenders?

Lenders may offer you different loan rates, terms and borrowing limits, so comparing options can help you find a loan that suits your needs.

How loans from Co-op can help

If you’re considering taking out a home improvement loan, Loans from Co-op could help you. With our partner ClearScore, you can access a panel of selected lenders to help you find a loan that suits your needs. Compare loans online without affecting your credit score.