Home Improvements and How to Finance Them

There are a number of different ways to finance home improvements. Looking to get your house in order without blowing your budget? To help you understand the different options, costs and risks, let’s take a closer look.

Benefits of home improvement 

More and more of us are opting to stay put in our current homes rather than buying a new one. 

There are a number of home improvement ideas you can carry out, from an extension to changes that make it more environmentally friendly.

Some of the benefits include:

• Potentially increasing the value of your property (when you do eventually come to sell)
• Potentially reducing energy bills through improved energy efficiency
• Improving comfort levels
• Giving you more space 
• Ensuring your home stands the test of time (and harsh weather conditions) 
• Keeping your house well-maintained
• Increasing the security of your property

Ways to finance home improvements

Your reasons for wanting to carry out work on your property might be solid, but they’re meaningless without a proper plan in place. 

How are you going to pay for it?

Let’s explore your options.

Take out a secured loan

A secured loan is taken out against an asset you own, usually your home. Eligibility, interest rates and the amount you can borrow will depend on the lender and your individual circumstances. Because the loan is secured against your property, your home could be at risk if you do not keep up with the required repayments. It’s a good idea to understand how home renovation loans work, including their costs and risks, before considering whether to borrow.

They’re not without their disadvantages though. Secured loans can have fixed or variable interest rates, depending on the lender and product. If the rate is variable, your repayments could increase. When comparing options, consider the interest rate, fees, repayment term and total amount you will repay.

Consider this option carefully and make sure any repayments would be affordable before making a commitment.

Tip: A longer repayment term may reduce your monthly repayments, but it can increase the total amount of interest you pay over the life of the loan.

Remortgage your property

Remortgaging your home is another option for homeowners considering how to finance improvements. Remortgaging generally involves replacing your existing mortgage with a new mortgage. Depending on your circumstances and the lender’s criteria, you may also be able to increase the amount you borrow to help fund home improvements.

Consider borrowing on your mortgage carefully. If you increase your borrowing when remortgaging, the amount you owe will increase. This could increase your monthly repayments and the total amount you repay over the mortgage term. So, before choosing this option, consider speaking to a regulated mortgage adviser who can guide you through the process and consider the mortgage options that may be suitable for your circumstances. You should also consider any arrangement, valuation or legal fees and whether an early repayment charge applies to your existing mortgage. Remember, don’t just consider the present, but also how this will impact you in the longer term.

Always do your research. Compare the mortgage options available to you, taking account of the interest rate, fees and overall cost.

We can help you find the right people to make this happen. Get a no obligation mortgage quote below.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT

Use your savings

Of course, if you have cash to hand, one option is to use money you have saved up. Many people prefer to do this rather than borrowing. 

There are no borrowing repayments or interest charges to consider.

However, depending on how much you have saved up and the scale of your renovation project, this might not be an option for you. You may simply not have enough, or if you did, it could eat into a large chunk of what you have saved up. 

Personal loan

Personal loans are also used to fund home improvement projects and are available from a range of lenders. Some personal loans have a fixed interest rate, which means your scheduled repayments remain the same during the agreed term. Eligibility, rates and terms will depend on your circumstances and the lender.

Interest rates and repayment terms vary between lenders, and the rate you are offered will depend on factors including your circumstances and credit profile. A longer repayment term can reduce your monthly repayments but may increase the total amount of interest you pay. Make sure the repayments are affordable before committing.

With personal loans: Check the terms for any fees or early repayment charges and consider the total amount repayable, rather than looking at the interest rate alone.

Release equity

Equity release is generally available to older homeowners and allows you to access some of the value tied up in your home. There are two main types: a lifetime mortgage and a home reversion plan, and they work differently.

With a lifetime mortgage, you take out a loan secured against your home while continuing to own the property. If you already have a mortgage or other borrowing secured against your home, this will normally need to be repaid before or when the lifetime mortgage completes, often using part of the money released. Lifetime mortgage providers will generally require their loan to take the first legal charge over the property, so an existing mortgage would not normally continue alongside it.

This means that if you still have a mortgage, the amount available to spend on home improvements may be less than the total amount released.

Interest is charged on a lifetime mortgage and, where it is added to the loan rather than paid, the amount you owe can increase over time. This will reduce the equity remaining in your home and may reduce the inheritance you leave.

A home reversion plan works differently. You sell all or part of your home to a provider in return for a lump sum or regular payments, while retaining the right to live there under the terms of the plan. The amount you receive for the share you sell will normally be less than its full market value.

Equity release can also affect your entitlement to means-tested benefits and local authority support for care. There may also be fees and early repayment charges to consider.

Equity release is a long-term financial commitment and may not be suitable for everyone. Consider the alternatives and speak to a suitably qualified, regulated equity release adviser before proceeding.

Credit cards

For smaller home improvements, a credit card may be another option. Some cards offer an introductory 0% interest period on new purchases, subject to eligibility and the card’s terms. Check how long the introductory period lasts, what interest rate will apply afterwards and whether any fees apply. Aim to repay the balance before the promotional period ends and make sure you can afford at least the required monthly repayments.

Tips for home improvement

Before you get the ball rolling, here are some useful things to consider:

Check if you need planning permission 

In some cases, you can extend your house without planning permission. However, if ever in doubt, always check – don’t assume.

You don’t want to run the risk of spending money on an extension, only to have to take it all down.

The planning permission process will depend on the type and location of the work, so check the requirements before starting. 

Find the right tradesperson

Having the right person for the job will make all the difference. 

When choosing a tradesman, don’t just look at the price (however tempting), also consider their experience and reputation.

Set a home improvement budget

Even smaller projects, such as decorating, can go wildly over-budget if you’re not careful. For example, the cost of house extensions can vary widely depending on the type of property and its age. Therefore, always set a budget and try sticking to it. 

Monitor the project closely to ensure you’re not overspending. 

Ready to get started?

If you need to borrow money but you’re unsure where to start, we can help.

If you’re considering borrowing for home improvements, you can explore options through our loan partner, Loans Warehouse. Checking your initial eligibility uses a soft credit search and will not affect your credit score, although a full credit application may involve a credit search.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT

Last Updated: September 22nd, 2026