Financing Options For Your Home Renovation
Home renovations can save you money in the long-run, whether its reducing your bills from energy-efficient upgrades or increasing your home value, the work often requires an upfront payment. Luckily there are a number of financing options available if you want to make improvements around the home. London homeowners have several financing options for renovations and we’ve compiled a range of options that are available for you.
Mortgages
Remortgaging: refinancing your current mortgage to release equity from your home can provide a lump sum for renovations but might extend your mortgage term or increase monthly repayments. If it makes sense to improve your home’s value by remortgaging then this might be the best option.
Home equity loans: borrowing against the equity you've built in your home. You’ll typically be offered lower interest rates than personal loans due to the collateral of your home’s equity.
Further Advance: An additional loan on top of your existing mortgage, suitable for significant renovations.
Renovation mortgages
Specialist products: Some lenders offer mortgages that include funds for renovations, allowing you to borrow based on the expected value of your home after improvements. It can be worth looking up online what banks and lenders are offering, there are a number of these particularly focused around energy efficiency measures.
Personal loans
Unsecured loans: These don't require any security, relying instead on your credit history. Interest rates may vary based on your creditworthiness.
Secured loans: Also known as homeowner loans, these use your property as collateral. They often have lower interest rates but come with the risk of losing your home if repayments are missed.
Home renovation loans
Specialised loans: Some lenders offer loans specifically for home improvements, often with terms tailored to renovation needs. These may provide more favourable interest rates compared to general personal loans.
Credit cards
0% Interest cards: Some credit cards offer 0% interest on purchases for an introductory period, useful for smaller renovation projects. Be aware of high-interest rates once the promotional period ends.
Government schemes
The Boiler Upgrade Scheme: A lump payment to replace existing fossil fuel heating with more efficient, low carbon heating systems including air source heat pumps, ground source heat pumps and, in limited circumstances, biomass boilers. You can receive up to £7,500 towards a heat pump or a boiler.
Great British Insulation Scheme: The GB Insulation Scheme help householders across the country improve the energy efficiency of their home and reduce their energy bills. £1billion is available over the next 3 years.
London-specific grants: Check local council websites for any available grants for home improvements, especially those related to energy efficiency or historical preservation.
Disabled Facilities Grant: Offers financial help to make homes more accessible for disabled individuals.
Savings
Personal savings: Using your own funds avoids the costs of borrowing, but requires having enough saved to cover renovation expenses.
Credit union loans
Community-based loans: Offered by credit unions, these loans often have favourable terms and are generally more flexible than traditional bank loans.
Bridging loans
Short-term financing: Used to bridge financial gaps. Suitable for quick renovations when selling or refinancing soon after. Typically come with high interest rates and fees.
Considerations when choosing a financing option
Interest rates: Compare the APR (Annual Percentage Rate) to understand the actual cost of borrowing.
Repayment terms: Examine the duration and monthly repayments.
Fees and Charges: Be aware of any upfront fees, early repayment charges, or additional costs.
Eligibility: Your credit score, income, and the amount of equity in your home will affect available options.
Risk: Secured loans and remortgaging involve putting your home at risk, so consider your ability to meet repayments.
Steps to take
Assess your needs: Determine the amount needed and your repayment capacity.
Compare options: Use comparison tools and calculators to evaluate different financing methods.
Seek professional advice: Speak to financial advisors or mortgage brokers for tailored guidance. Citizens Advice offers helpful, free advice on topics like this.
Plan your renovation: Have a clear budget and timeline for your project. Get a home assessment and see what the value of your home might be and the savings on your bills if you renovate.
At Beams we keep things transparent
At Beams we provide clear pricing right from the beginning, on materials and work. This avoids creeping costs and nasty surprise prices later on.
We base your labour estimates on data from 4,000 renovations, what we’ve learned about your home, and the expertise of our construction specialists.
That’s how we can guarantee the cost of your renovation won’t change once we’ve laid the first dust sheet. You also only make the final payment when you’re happy with the work.
If you’d like us to guide you from design to the completion of the work by our vetted contractors, then get your free estimate today:
