Home Improvement Loans

Adding an extra room in your loft, or just performing routine maintenance on an aging property can be expensive and will most likely require financing.

A home improvement loan might be just what you need to renovate or restore your property. Tradesmen such as carpenters, electricians, plumbers, plasterers are an expensive addition to the overall home improvement budget, but for many homeowners, they have no alternative, because their own skills are not sufficient.

Most homeowners are able to arrange a home improvement loan, but some may decide voluntarily, or be forced, to have the loan secured on their home or other valuable possessions. Fortunately, loans that do not require the home itself as equity are available to brand new homeowners. The maximum period for finance without any form of equity can be up to fifteen years.

The eligibility for finance without equity can depend on the combined household income, which should not exceed the county limit where the property is located. The eligibility of the borrower, the property type and the improvements planned are all considered, because this type of loan may only have minimal documentation and is relatively easy to process.

A secured home improvement loan allows you to access some of the equity in your home, so that you can take out a loan against your property. This type of loan is much quicker to organize and because the house is being used to secure the loan, it benefits from better terms and lower interest rates.

Still, before a secured loan can be arranged, the equity available in your home will need to be agreed upon by the lender. All factors are considered before a final amount is agreed upon, and this includes how much is owed on the mortgage, its current value, and any other debts the owners may have.

At this stage, everything is still under negotiation, and is only finalized when the applicant agrees to the amount, payments and any conditions. While most loans are based on a set percentage of the property's value, some lenders will agree to fund up to 125% of the valuation.

Over extending your ability to pay is the quickest way for a person to lose their home, when they cannot keep up the payments. It is never a good idea to borrow more than you can afford to repay, no matter how noble the cause, so if your home improvement loan will cause financial hardship, restrict it to cover just essential maintenance.


Return from Home Improvement Loans to Real Estate Investment Financing