Renovating your home could be a great idea for multiple reasons. It could be because of improving the re-sale value or just updating the lifestyle. Whatever the goal, financing with savings is challenging. Individuals struggle to save enough for life improvement goals like- updating homes. It takes about £50000-£150000 to update a home. Having that much money in savings given other liabilities is rare. However, you don’t need to delay the renovation. 

Delaying may only impact the current value of the home. Instead, seek options that may help you with home renovation. One of the best ways to do so is by seeking a home improvement loan. It is essentially for improving your existing or new residential property. It could be secured or unsecured depending on your finances and needs.

What are home improvement loans?

Home improvement loans refer to the financial assistance that lenders offer to individuals. It helps borrower repair or update their home fixtures. One can use it to create a loft,  repair the kitchen cabinets, refinish the bathroom, etc. An unsecured home requires a good credit history with stable finances. Whereas, you need stellar credit and pledge an asset to get secured loans. One may get it for a longer term from 12 months to 7 years.

What should you analyse before getting a home improvement loan?

Analyse the project coverage before seeking a home improvement loan. If your home repair needs to suffice £10000, it may not be ideal. Instead, one may use it for a massive or complete haul over.  Additionally, it must fit your budget. Here are other things to understand before getting home improvement loans:

1)      Understand the amount and credit required

Prepare a list of the requirements you wish to complete with a home improvement loan. It could be replacing the doors, painting the walls, replacing furniture, etc. Calculate the amount you need ( approx.) to meet the requirement. Research for the best quotes providing the right amount of estimates. Check the exact portion to finance your home improvement requirements. Identify the credit score requirements.

It may differ according to different home improvement loan providers. If you lack a decent credit history, wait and build it. If you can’t wait, get loans for home improvement with bad credit scores. You may not get a secured loan without a guarantor under this.  However, individuals with regular income and stable finances may get an unsecured loan for a poor credit history. You can use it to update the house interiors without worries.

2)      Analyse the eligibility criteria

However, the criteria remain the same for home improvement loans, explore options. Some aspects may differ. It is important to dig deeper regarding credit score, income and age criteria. Research the loan providers and understand the criteria. It will help you know the affordable loan provider to contact. Here are the general criteria to qualify for home improvement loans :

·         Must be above 21 as a UK citizen

·         Must hold an income no less than £20000/ month for loans between £20000-£25000.

·         You must be employed, self-employed or pensioner

·         You must hold a good credit record without recent bankruptcy or CCJ status.

3)      Choose the right from floating and fixed interest

When taking a home improvement loan, you may encounter different interest options. The most common interest rates include fixed and floating interest rates.  The fixed-rate remains fixed despite market changes. In this, you pay a fixed amount despite shifting economies.

Alternatively, the floating interest rates imply that the interest may change according to the shifting economies. You can choose a fixed one if you walk by a fixed budget. Alternatively, floating ones are the best to benefit from interest changes.

4)      Keep miscellaneous charges in mind

Check miscellaneous charges while comparing different rates across the loan providers. You may spot the space for reducing the charges with awareness. Check the hidden costs that you may find in the loan agreement. Confirm the same with the loan provider. In this way, you can save yourself from paying extra on the loan.

5)      Pick a comfortable repayment period

The repayment term is an important matrix when getting a home improvement loan. Generally, a repayment period depends on your income, budget, and liabilities. It depends on when you can comfortably pay the dues. Choosing a shorter repayment period helps you save on interest costs. However, you pay higher monthly repayments here.

Alternatively, long-term terms help you make small payments with high interest costs later. Decide the one that suits your finances better. Choose the right one with a secured home improvement loan.

6)      Prepare the necessary documents

Most loan providers require some documents to approve the loan. It helps them verify the borrower’s finances and identity. Generally, they may ask you to present the following documents:

·         Proof of permanent residential address

·         Identity proof- ID card/ passport/ driving license

·         Details of income- bank statements, salary slip, pension proof

·         Asset verification-  value of asset and LTV ratio ( secured loan)

Bottom line

These are some aspects to understand before seeking a home improvement loan. It will help you take the right loan for your needs. Identify the amount required, interest rates and repayment tenure for the ideal quote. Check additional or hidden costs involved. It prevents you from paying extra on the loan.

Description: If you want a home improvement loan for your needs, the blog may help. It lists the aspects to check before getting one. It may help first-time seekers.

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