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Finance home improvements through a secured loan
If you want to carry out some home improvements, such as building a conservatory, replacing your boiler and heating system, converting your loft, or other major works, you may be wondering how you are going to finance it. You have a couple of options open to you that you can consider with pros and cons to each one. One option is that of taking out a secured loan against your home and this is the option that will be discussed here. Your other options include unsecured personal loans, but you may find that they are more difficult to get approval for.
If you need to borrow less than £25,000 and have a good credit rating then you could consider and coompare the rates offered for an unsecured home improvement loan.
What does having a secured loan against your home mean?
Basically having a secured loan against your home means that you have used the value in your home as security for the lender so that they can provide you with a loan at a lower risk than if you took out an unsecured loan. However, although it is easier to get a secured loan than an unsecured loan for you, the borrower, you also take on more risk by doing so because should you fail to keep up your repayments you would be at risk of losing your home.
Know your options
In order for you to make a decision about which type of loan is going to be best for you, you should seek advice in a number of areas. You should know and understand your own financial situation and have a good idea of the level of repayments you would be able to make on a monthly basis. You should also factor in interest rate rises so that you know what your repayments could rise to in the future. If you have a good credit rating you will find that you have a lot more options available to you than if you have a poor credit score so bear this in mind when you are looking for loan options. If you have a bad credit rating you will find that you will be more successful in using a secured loan against your home because you will be perceived as being a much lower risk than for an unsecured loan. If you maintain your monthly repayments you could also use the loan to help increase your credit rating as you go.
The importance of home improvements
Taking out a secured loan for home improvements can be slightly different than for other purposes because you will be adding to the value of the property by carrying them out, therefore lenders are also likely to look more favourably on these loans than loans for other uses such as paying for weddings or buying a new car.
It’s also worth considering that there is a limit to the amount you can borrow with an unsecured loan and therefore if you are looking to borrow in excess of £25,000 then a secured loan may be your only option.
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