Home Improvement Loans
Loans for home improvements are often closely related to advances against
your mortgage, although the process of remortgaging is much more complex.
Providing home improvements are done properly, taking out a loan for this
purpose can usually be seen more as an investment than an additional debt
burden. Typical home improvement purchases might include a new kitchen, double
glazing, conversion of a loft or basement, or general redecoration and new
furniture. Of these, the latter is least likely to add value to the house, as
furniture and paint work can deteriorate fairly rapidly, whereas major
structural improvements tend to be much longer lasting, and backed up by
long-term guarantees.
One key factor to consider when searching for home improvement loans is to
make sure that you do not over develop your property. Estate agents often talk
of a “ceiling price”, above which people are not usually likely to want to spend
in any particular street. This can be a particular concern if you are
considering a major extension on an end terrace property, as you could end up
with a significantly higher value house than any of the other properties on the
street, but which few people are actually willing to buy.
Advantages of home improvement loans
- Opportunity to create new space in your house by adding extra rooms. This can
be especially useful if you have new children on the way.
- Opportunity to improve general comfort levels.
- Home improvements usually add value to property.
Disadvantages
- Possibility that home improvements do not add enough value to property to
justify their cost (especially if “DIY” labour costs are taken into account).
- Sometimes, simple cosmetic changes can add value to the property much more
quickly and cheaply than making a major home improvement. unsecured loans for
home improvements may work out as much more expensive than remortgaging.
- Home improvement projects can have a tendency for costs to spiral beyond the
original estimates. This can be a significant problem if you are borrowing
towards the edge of your credit limits. In the worst cases, projects may have to
be abandoned due to lack of funds.
- Potential for over-development of your property, making it harder to sell.
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