Making necessary improvements to your home when on a tight budget can seem impossible, particularly if your home requires a vast amount of work put into it. But it is not impossible to access these funds to help you carry out this work before the weather gets too harsh.
What Is A Home Improvement Loan?
A home improvement loan is a loan that you can take out to improve your home. Whether this is a small improvement or renovation this style of the loan may aid in covering the costs. However, due to the nature of this loan, you are met with borrowing caps, depending on the amount of money that you are looking to apply for.
How Much Can You Borrow With A Home Improvement Loan?
Before applying for a home improvement loan, it is vital that you get quotes from a number of lenders. This will help you to roughly calculate the costs of repairs or renovations and maintain financial stability. It is also important to check the amount that you can borrow from each lender to ensure that they are able to fund your project. Typically, you are able to borrow between £1,000 to £35,000 with a home improvement loan, however, this can differ based on the lender and your credit score. With this information, you can then compare the prices to ensure you are getting the best rates for your chosen home improvement loan on the market.
How Can This Benefit Me?
This style of personal loan can benefit you as it enables you to make changes to your home that could potentially increase the property value of your home. This is ideal for those that are planning on making improvements before putting there home on the market as this will help to increase the profit over time. This, therefore, means that any developments made with this loan are a long-term investment that will benefit your quality of life and make the home more appealing to the next owner when you come to sell.
How Do I Know If I Am Eligible?
Before applying for an improvement loan such as this you should follow a simple 4 step list. This will not only ensure that you are able to borrow the amount you need, but it will also ensure that everything is recorded as it should be. The steps are as follows:
- Work Out How Much Equity You Have In Your Home
Though working out the Equity can seem complicated, it is as simple as taking the worth of your home and minus this from the amount that is outstanding on the Mortgage or other secured loans put against your home. This will then determine whether or not you are able to afford the loan type you are looking for. A number of lenders will recommend 20% equity of your home in order to approve you for a home improvement loan, therefore it is vital that you check.
- Check Your Credit History And Credit Score
Another crucial element to check during the eligibility process is credit history and overall credit score. This will determine whether you will qualify for an unsecured improvement loan or a secured homeowner loan. Though there is not much between the two, this may determine the amount of money that you are allowed to borrow.
- Get Your Proof Of Income
Under regulations from the FCA and other governing bodies, each lender has a duty of care to those looking to borrow money from them. Because of this, the lender will ask for proof of income as part of an affordability test. This will not only look at an incoming salary in the form of payslips, but it will also look at outgoing expenses
- Ask For Quotes From Contractors
Before applying it is important that you have an idea of how much the project will cost. Therefore, it is important to have a number of quotes from contractors. This will show the lender that you are aware of the amount you are borrowing and is showing them that you have factored in unexpected difficulties as well as have a contingency plan. This will help you to past the affordability test as this will show to the lender that you are able to manage your funds efficiently.
How To Find The Best Price For Your Home Improvement Loan
Finding the best price is a simple as comparing prices from a wide range of contractors. This will provide you with a better understanding of the prices of your project and will allow you to input accurate information into a personal loan’s calculator. This is highly beneficial during the initial stages of application and this will allow lenders to see the full extent of the project and conduct a thorough affordability check.
Whether you are looking to make subtle improvements to the exterior of your home or you are looking to completely update the central heating system, this style of loan can help you to gain access to the funds that you need in no time.
