How to finance home improvements

Whether you’re looking to boost the value of your house or make your living space more suitable for your needs, home improvements can be an alluring addition to any property.

But what does it all cost, and how can you pay for it?

In this guide, we’ll talk through the necessary steps to budget for and then finance your home improvements. This means spending less time worrying about costs, and more time planning your renovations.

Budgeting for home improvements

Without proper budgeting, any home renovation project has a chance to spiral out of control.

Planning a budget in advance will allow you to clearly estimate what you want to do, calculate what it will cost and then decide on the best way to finance the home improvements.

To do this, follow these simple steps:

1) Plan what you want to do

You may already have an idea of what you would like to change, but now is the time to get those ideas down on paper.

Start by listing the broad alterations you would like to make, such as remodelling a kitchen or adding a conservatory, and then spend some time researching exactly what you might need to do that.

In the case of a kitchen remodel, for example, you may decide that you want to replace the worktop, cabinets and all of the white goods, but are happy to keep the flooring the same. By deciding on the specifics of your remodel, you then have a clear plan to start costing out your home improvements.Still looking for inspiration? Our guide to home improvements covers all of the typical renovations for boosting your property’s value, weighing up their pros and cons to help you make a decision.

2) Understand what it will typically cost

With your plans starting to take shape, it’s now time to consider the cost you might expect to pay. 

All home improvement costs will be dependent on the property, the work being done and the companies providing the services. To get a rough estimate, you can look into the average costs for home improvements and the specific renovations you’re hoping to make.

Using these averages as a guide, you can consider how the improvements you’ve been planning match up to the budget expectations you started with. Don’t be too concerned if they are vastly different, as you may be able to get a good price with a trusted local tradesperson.

3) Review quotes from local tradespeople

Equipped with your renovation plan, and a sense of the ballpark costs you might expect, it’s time to start reaching out to local tradespeople for quotes.

When making your inquiry, it’s important to list out all of the things you would like done and then ask for a written quote, rather than an estimate. Seek to get at least three quotes so you can compare them in detail. It’s also worth looking online to find reviews from previous customers.

Once you’ve decided, ask for a written costed agreement. Sometimes, your supplier may tell you that they need to do a little extra work after the job has started. If this happens, ask them for a written estimate and another fully-costed schedule of the additional work required.

4) Consider your finance options

If the quotes you’re receiving are more costly than you had previously budgeted for, you have many finance options to consider.

To help with this, we’ve created an in-depth guide to financing home improvements.

Your finance options to fund home improvements

There are many options for financing home improvements available to you, each with its own advantages and use cases. We’ve summarised each of them below for you to review and weigh-up whiThere are many options for financing home improvements available to you, each with its own advantages and use cases. We’ve summarised each of them below for you to review and weigh-up which is most suitable for your needs.

Pay for home improvements with cash

The best way to finance home improvements really comes down to what’s manageable for you. You could use existing savings to pay for the work, however this isn’t always possible. In some cases, it might be preferable to get the work done sooner, rather than having to wait for months or even years to save up the necessary funds to get started.

You might also consider using some of your savings to fund the project and then borrowing a small amount to fund the remainder. This flexible option enables you to use your savings without draining them entirely.

If you’re fortunate enough to have the money to hand, then paying with cash is a great  way to get the work underway quickly and efficiently.

Advantages of paying with cash

  • Simplest way to finance home improvements
  • Total freedom over how and when you use the funds
  • Quickest to get started, providing you have the cash to hand
  • No interest, fees or charges to consider

Disadvantages of paying with cash

  • Saving up for larger projects can be difficult and take years
  • Depletes your savings, exposing you to vulnerability for any unexpected expenses

Use a credit card to fund home improvements

For smaller projects, credit cards provide a flexible way to access funds when you need them. The limits will be lower than you might be able to get with a personal loan, but that c

For smaller projects, credit cards provide a flexible way to access funds when you need them. The limits will be lower than you might be able to get with a personal loan, but that comes with other benefits and options, such as 0% interest cards.

At Freedom Finance, for example, we offer credit cards with limits up to £3,000 and an option to spread the costs across a 0% purchase card. This means that you won’t have to pay any interest on the amount spent for a set period of time. Once the card’s 0% interest period comes to an end, the card’s usual interest rate will apply.

Providing you pay attention to the amount owed on the card and stick to the repayment requirements, credit cards can be a flexible way to finance smaller home improvement projects.

Advantages of funding with a credit card

  • Money easily accessible whenever you need it, within the card’s spending limit
  • Can help boost your credit score if repayments are consistently made on-time

Disadvantages of funding with a credit card

  • Only suitable for smaller projects due to lower spending limits
  • You could unintentionally spend more than you can afford
  • You may need to pay interest or fees if you do not pay back the debt on-time

Unsecured loans for home improvements

Unsecured loans enable you to borrow the funds to pay for your home improvements, without tying the debt to any collateral or assets like your property.

Personal loans for home improvements are often unsecured. Although you could be eligible for a personal loan if your credit score is less than perfect, the better your credit score, the better the rate you’ll be likely to get.

It’s important to keep in mind that, while they are not tied to your assets, unsecured loans depend on your credit score and the lender’s eligibility criteria. If you have a lower credit score, a secured loan may therefore provide you with a better rate, depending on the equity in your home. Unsecured loans can often have lower limits than secured loans, which may be important if you’re financing something bigger, like a home extension.At Freedom Finance, our current lenders offer personal loans between £500 and £30,000, for example. So if you’re expecting to need more than that for your home improvement project, then you may want to consider a secured loan instead.

Advantages of getting an unsecured loan

  • Borrow larger sums without putting assets like your home at risk
  • Quick to reach completion and make the cash accessible to you
  • Accessible to most people, providing they meet the credit check requirements

Disadvantages of getting an unsecured loan

  • Shorter repayment terms, typically only up to 7 years
  • Interest rates could be higher than a secured loan
  • Amount you can borrow is lower than with a secured loan

Secured loans for home improvements

Secured loans allow you to borrow greater sums of money to fund more ambitious renovations, but come at the cost of requiring collateral, such as your home.

You may be able to get a better interest rate, spread out over longer repayment terms. This can make secured loans an appealing and manageable option, providing you have a steady source of income. You can also often repay the amount in advance without facing a fine, for example, with profits from the sale of your recently-renovated property.At Freedom Finance, our lenders currently offer secured homeowner loans with values from £5,000 up to £2,000,000. It’s important to note with secured loans that your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

Advantages of getting a secured loan

  • Potential to borrow more money
  • You could be approved, even if you have a lower credit rating
  • On-time repayment of a secured loan can improve your credit score
  • With a secured loan, you can get advice from a qualified adviser on the best secured loan option for you

Disadvantages of getting a secured loan

  • Must be tied to collateral like your home or other assets
  • If you do not keep up with repayments, your property could be repossessed
  • Slower to reach completion and access the funds, as lenders will need to assess your collateral

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

Remortgage to finance home improvements

If you need to borrow a larger amount but a secured loan doesn’t feel like the right choice, you may want to consider remortgaging to finance your home renovations.

By moving the mortgage on your existing property from one deal to another, you might be able to release some equity from your home, freeing up cash that can be then reinvested into renovations.

Remortgaging can be particularly advantageous if your property’s value has recently gone up, or if interest rates are currently low. It is important to consider that remortgaging can be a lengthy and costly process. So you may not benefit from it as much if the remaining debt on your existing mortgage is relatively small, or if the value of your property has decreased.It’s important to weigh-up whether now is a good time to remortgage, based on your individual circumstances and the options available. Our partners at Freedom Mortgages, for example, search deals from over 90 lenders to try and find you a better rate and reduce your monthly mortgage payments.

Advantages of remortgaging

  • You may be able to borrow at a lower interest rate
  • Utilise your home’s equity for additional cash
  • You may be able to borrow a larger amount, spread over a long repayment term

Disadvantages of remortgaging

  • Remortgaging fees can be costly, especially if you want to remortgage early
  • Remortgaging can take a long time and a lot of effort
  • It will often extend the timeframe of your mortgage
  • Your home may be repossessed if you do not pay your mortgage on time
  • If house prices fall, it could reduce the remaining equity in your home even further

Looking to borrow to fund your home improvements?

No matter how you decide to fund your home improvements, Freedom Finance is here to help you bring your ideas to life.

Explore our home improvement personal loan options