The cost of home improvements depends on what you want work you want to do. For example, you can install a new bathroom for under £10,000 but if you want to convert your loft you could be looking at between £21,000 and £63,000 in costs.
If you need to finance your home improvements then you could get a loan and there are lots of different options available to choose from.
Our guide covers home improvement loans, what affects the cost of a home loan, what types of loans are available, how to find them, and how you can save money on home improvements and renovations. We’ll also answer some of your frequently asked questions.
Topics
How Much Does a Home Improvement Loan Cost?
In the table below, you will see representative examples of the cost of a home improvement loan from a selected number of lenders.
| Lender | Amount of Loan | Representative APR | Repayment Term | Monthly Repayment | Total Repaid |
|---|---|---|---|---|---|
| Tesco | £10,000 | 2.9% | 60 months | £179.07 | £10,744.20 |
| Santander | £10,000 | 3.0% | 60 months | £179.51 | £10,770.60 |
| RBS | £10,000 | 3.4% | 60 months | £181.25 | £10,875.00 |
| Nationwide | £10,000 | 2.9% | 60 months | £179.07 | £10,744.20 |
| Sainsburys | £10,000 | 2.8% | 60 months | £178.64 | £10,718.40 |
| Halifax | £10,000 | 3.50% | 60 months | £181.67 | £10,900.20 |
Please note that this guide is for your information only. HouseholdQuotes does not provide financial advice and does not recommend any particular lender. The order in which lenders appear on this page does not indicate that one lender or product is potentially more suitable than another.
We obtained the figures above from each bank or lender’s website in August 2021. Lenders may change their product offerings and terms at any time. If you apply for a loan, the terms you are offered could differ from those outlined above. You should always read through the full terms and conditions before agreeing to a home improvement loan. We may have affiliate relationships with certain lenders. If you decide to apply for a loan through one of our affiliate partners, we may earn a small commission at no additional cost to you.
As you can see, some lenders have a lower interest rate than others. This affects how much the loan will cost you in the long term.
For example, Tesco Bank has an APR of 2.9%. This means that a loan of £10,000 will actually cost you £10,744.20 if you take the full 60 months to repay it. On the other hand, Halifax has an APR of 3.5% so a loan of £10,000 will cost you £10,900.20 if repaid over 60 months.
If you’re considering a home improvement loan, click the button below to see what different banks could lend you:
Click To Get QuotesWhat Affects the Cost of a Home Improvement Loan?
Several factors will impact the final cost of a home improvement loan. You need to be aware of what could impact the cost of your loan before you apply.
The Type of Home Improvement Loan
Many banks and lenders now advertise home improvement loans, but these loans can be secured or unsecured (personal) loans.
Personal home improvement loans don’t require assets like a house or car. These unsecured loans are typically for smaller amounts, and interest rates for these loans are usually lower.
Secured home improvement loans must be secured against your house or other assets. You can often borrow a lot more than with a personal loan, which is helpful if you’re planning major renovations like a loft conversion, extension, or full house remodel. But, lenders usually charge higher interest rates for secured loans.
The amount a bank is willing to lend for secured loans may also depend on the value of your home and how much equity you have in it. Many lenders will have a limit on the amount they lend. This could be between 70% and 95% of the value of your property.
To learn more about secured home improvement loans, see our complete guide.
Occasionally, some banks and lenders may offer renovation loans. These are loans that are based on the projected value of your home after the building work is complete.
For renovation loans, lenders may give you the loan in a lump sum or disburse it in stages as the work progresses. Sometimes, the lender will hold back an amount (usually around 5%) until the work is complete.
How Much You Want to Borrow
In general, the more you want to borrow, the more you’ll have to pay in interest. This is because banks and lenders see larger loans as a greater risk.
For personal home improvement loans, most banks will lend between £25,000 and £50,000. As you can see in the table above, the representative APR for personal home improvement loans ranges from 2.9% at Tesco Bank to 3.5% at Halifax.
If you need a bigger loan, then you’ll need to look into secured loans. Many lenders offer secured home improvement loans for £100,000 to £250,000 but some financial institutions may offer as much as £500,000.
The representative APR for secured home improvement loans can be much higher.
It’s important to do your research before applying for a loan. To compare lenders and see how much you could borrow, click the button below:
Click To Get QuotesHow Quickly You Want to Repay the Loan
The loan term also affects the cost of the loan.
Generally, loans with shorter repayment terms normally require higher monthly payments but cost less in total because you may not have to pay as much towards interest.
Loans with longer repayment terms may have lower monthly payments. However, they could be more expensive overall because you might have to pay more in interest over the full term of your loan.
For personal home improvement loans, banks typically allow you to repay your loan over 12 to 60 months. For larger personal loans, banks such as NatWest and RBS allow you to repay the loan over a period of up to 10 years.
Your Credit Rating
When you apply for a home improvement loan, banks will look at your credit rating as part of their evaluation.
Your credit rating could affect whether a bank is willing to lend you money, how much you can borrow, the length of the repayment term, and what interest rate they offer you. For that reason, it’s a good idea to check your credit history before you apply for any loans.
Your credit history is kept with three agencies which are:
- Experian
- TransUnion
- Equifax
Each agency calculates your credit score with a number and they are as follows:
| Agency | Score | Band | ||||||
|---|---|---|---|---|---|---|---|---|
| Equifax | 0 to 438 | Very poor | ||||||
| 439 to 530 | Poor | |||||||
| 531 to 670 | Fair | |||||||
| 671 to 810 | Good | |||||||
| 811 to 1000 | Excellent | |||||||
| Experian | 0 to 560 | Very Poor | ||||||
| 561 to 720 | Poor | |||||||
| 721 to 880 | Fair | |||||||
| 881 to 960 | Good | |||||||
| 962 to 999 | Excellent | |||||||
| TransUnion | 0 to 550 | Very Poor | ||||||
| 551 to 565 | Poor | |||||||
| 566 to 603 | Fair | |||||||
| 604 to 627 | Good | |||||||
| 628 to 710 | Excellent |
Some agencies may offer free credit reports, but they often require you to pay a fee to see your actual credit score.
Your credit report includes personal information like your date of birth and address history.
It shows any loans you may have, as well as credit cards, phone contracts, and utility accounts. The report also notes any late or missed payments, bankruptcies, or County Court Judgments (CCJs). However, it doesn’t show how much you earn.
If your credit score is lower than you’d like, you may want to improve your score before applying for a loan. The government’s Money Helper service has impartial advice on how to boost your credit score.
Your Income and Outgoing Expenses
The cost of a home improvement loan also depends in part on how much you earn, and your monthly expenses.
On the whole, banks will only lend you an amount that you can comfortably afford to repay each month because they want to be sure you’ll pay the loan back in full and on time.
Some lenders may be willing to take more risks when it comes to home improvement loans, but you should expect to pay more in interest.
To easily compare different home improvement loans, click the link below:
Click To Get QuotesWhat Are the Potential Advantages and Risks of Home Improvement Loans?
Potential Advantages
Whilst only you can determine if a home improvement loan is the right choice for you, the main advantage of a personal loan is that it enables you to complete important renovations without risking losing your home.
The main advantage of secured home improvement loans is that you can borrow larger amounts, which is ideal for large scale or bespoke renovations. Sometimes, banks and other lenders offer lower interest rates on secured loans too—saving you money.
Potential Risks
Borrowing money always carries certain risks.
With personal loans, there is a risk that you could be fined if you don’t keep up with payments. The bank or lender could even take you to court if you don’t pay. A CCJ can affect your ability to get credit or loans in the future, and could also make it more difficult for you to rent a flat or house.
The amount you can borrow with a personal loan is often lower. Depending on the bank or lender, you may have to pay a higher interest rate for this type of home improvement loan.
For secured loans, you risk losing your home or other assets if you don’t keep up with payments every month. These late or missed payments will be noted on your credit report, and you could have difficulty getting new credit, loans, or mortgages going forward.
Please note that this guide is for your information only. HouseholdQuotes does not provide financial advice and does not recommend any particular lender. You should always read through the full terms and conditions before agreeing to a loan.
How Can I Save Money on a Home Improvement Loan?
There are several ways to save money when taking out a home improvement loan.
First, it’s a good idea to start the process by talking to your bank or mortgage provider. You have an established history with them, so they may be willing to offer you a more generous loan, a lower interest rate, or better repayment terms.
However, don’t be afraid to shop around. So many banks offer personal and secured loans for home improvements these days, so you have plenty of options to choose from.
Whilst the amount you borrow depends in part on the project you have in mind, try to only borrow as much as you need to complete the work. Personal loans are usually smaller and often have lower interest rates than secured home improvement loans.
When choosing a bank or lender, consider how much they want to charge you in interest. Interest can dramatically increase the overall cost of your loan, especially for large loans and loans that are repaid over longer periods of time.
Finally, when taking out a loan, it’s important to consider how much you can realistically afford to repay every month. If you can afford to pay more each month, repaying the loan sooner will save you money on interest in the long term.
To see how much you could borrow from different banks and lenders, click the button below:
Click To Get QuotesHow Do I Find a Bank or Lender?
To start, try talking to your bank or building society to see if they can help. In many cases, banks and building societies are more likely to give lower interest rates to their customers with a good credit history.
If you need a large loan or you have special circumstances such as a poor credit rating, you could also consider a financial broker who can connect you to lenders that offer specialist loans.
We’ve tried to simplify the process of finding a home improvement loan by comparing the top lenders. Check out our comparison guide here!
If you’re ready to get a home improvement loan now, click the button below to see how much you could borrow:
Click To Get QuotesWhat Questions Should I Ask?
When you speak with your bank, building society, or other lender, be sure to ask plenty of questions about the loans they offer. Always make sure you fully understand the terms and conditions before agreeing to any loan.
Some helpful questions include:
- How much can I afford to borrow? Look carefully at your incomings and outgoings. Your lender will tell you how much they can loan you. You want to be able to repay any loan you get without putting a strain on your finances.
- How much will I have to pay each month? Your lender will tell you how much you need to pay each month on the amount you want to borrow. If it is too much you can either reduce the loan amount or ask for longer to repay the loan.
- What interest rate will you charge me? The interest rate you get will depend on the bank, how much you want to borrow, and your personal circumstances. If you have good credit, the bank or lender may be more willing to offer you an interest rate closer to their representative APR.
- How long do I have to pay off the loan? Most lenders will give you between 1 and 10 years to pay off a personal loan for home improvements. Secured loans can be paid off between 2 and 10 years. Some banks allow repayment terms of up to 15 years.
- Are there any fees? When applying for a loan, your bank or lender may charge you a loan arranging fee to cover their administrative costs. This can be in the range of several hundred pounds, or it could be a percentage of the total loan.
Final Checklist
Use the checklist below to ensure you’re caught up on the best steps to take when searching for a loan:
- Decide what type of home renovations you want to carry out.
- Create a complete budget that includes materials and labour costs, as well as the cost of any applications for planning permission or building regs approval.
- Review your finances and decide how much you can comfortably pay back each month.
- Compare loans to see what different banks are willing to lend and how much they charge
- Apply for your loan
- Start your home improvements when the money is in the bank and stick to your budget
Click To Get QuotesFrequently Asked Questions
Can I Repay the Loan Early? Is There an Early Repayment Charge?
What Happens if I Change My Mind About the Loan?
This time scale is called the cooling-off period.
If you want to cancel your loan during the cooling off period, you’ll have to inform your lender by post, email, or telephone. Normally, you have up to 30 days to pay back any money that was paid into your account. Your loan may still accrue interest during this period, and you may have to pay a cancellation fee.
If you have taken out a secured loan, there isn’t normally a traditional cooling-off period. But, there could be a ‘consideration period’ after the bank or lender sends you the loan offer. This is typically less than the normal cooling-off period. For some lenders, it can be as little as 8 days.
If you’re granted a secured loan and you want to cancel after the consideration period has passed, you could apply to repay your loan early, which could incur a fee (often between 1% and 5% of the total loan).
How Much Can I Borrow Using a Home Improvement Loan?
Secured loans use your home or other assets as collateral or security. Many lenders offer secured loans ranging from £50,000 to £250,000 but some may even offer as much as £500,000.
The amount depends on your income and outgoings, the value of your home, and the amount of equity you have in it. Typically, you can borrow between 70% and 95% of your home’s value.
Can I Get a Home Improvement Loan With Bad Credit?
However, you may find that only a few banks or lenders are willing to loan you the money. You may also have to pay a higher interest rate.
To help make the process easier, we’ve developed a guide to loans for bad credit.
Can I Improve My Credit Score?
- The ways you can improve your score are:
Make sure you are on the Register of Electors. You can find out whether you are on it by checking with your local Electoral Registration Office. - Find your local office by going to the Gov.UK website. Type in your postcode and your local office should come up.
- You can also register to vote online at the Electoral Commission’s website.
- You could also take out a credit building credit card.
- You can choose to pay minimum payments, in which case you will pay interest or you could use it for everyday spending and pay it all off at the beginning of each month.
Whatever method you choose it is important to make your payments on time and never miss a payment. Another tip is not to max out the card.
If you have a credit limit of £1,200 try and limit your spending to 50%, which will be £600.
What Are Some Other Ways I Can Pay for Home Improvements?
For example, if you have a property worth £250,000 and it has a mortgage of £125,000 you have equity of £125,000.
You could use some of this money for your home improvements by applying for a remortgage.
You will then have a mortgage with a new amount. The benefits of remortgaging are that you might reduce your monthly outlay if you increase the term of your mortgage.
You don’t have to, of course, you can choose to pay over the same period you were paying, or even make the term a shorter period.
If your renovation is small and you can afford to pay it back in a short time you could use a 0% credit card. Some lenders will give you between 20 months and 22 months of free interest on purchases.
You could therefore use this type of card to pay for materials or appliances.
If you’d like to know more about financing for home renovations read our guide.
What Are My Rights if I Decide to Cancel?
Once you have told your lender you want to withdraw you normally have 30 days to repay the money, if it is already in your bank.
You will probably be charged interest every day until the loan is repaid. If you delay and you miss the 30-day limit you could be charged an early redemption fee as well as interest.
If you taking out a loan secured on your home then there is no cooling-off period. If you decide to change your mind then you will pay interest and an early repayment charge.
The early repayment charge could be between 1% and 5% of the amount you owe. That means if you have borrowed £20,000 you may have to repay between £200 and £1,000 in early repayment fees.
What Does Representative APR Mean?
If you see a loan with a representative value, it means that 51% of customers will get this rate and the rest will be offered a different interest rate, probably something higher.
How Much Does It Cost to Renovate a House?
You can read more about home renovation and the costs in our guide.
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