Home improvement loans which option is right for you?

Home improvement loans are simply borrowed money used to fund property renovations, extensions, repairs, or upgrades. In many cases, a home improvement loan is a personal loan or secured loan used specifically for a home-related project, repaid in fixed instalments over an agreed term.

You could fund home improvements with:

• An unsecured personal loan
• A secured loan (also called a homeowner loan or second charge mortgage)
• A remortgage with capital raising
• A 0% purchase credit card
• A further advance from your existing mortgage lender

Each option works differently and suits different circumstances. A £5,000 kitchen refresh has very different financing needs to a £50,000 extension, and someone with an excellent credit history has more options than someone rebuilding their credit after financial difficulties.

Common home improvement projects we help people finance include:

• Kitchen renovations (£5,000-£50,000+)
• Bathroom installations (£3,000-£15,000)
• Extensions and conservatories (£15,000-£100,000+)
• Loft conversions (£20,000-£60,000)
• New boilers and heating systems (£3,000-£10,000)
• Double glazing and windows (£3,000-£15,000)
• Garden landscaping (£2,000-£20,000)
• Rewiring and electrical work (£3,000-£10,000)
• General decorating and cosmetic updates (£1,000-£10,000)

The trend to improve rather than move continues to grow across the UK. Stamp duty, estate agent fees, legal costs, and moving expenses can easily add up to 5-8% of a property's value, so renovating often makes more financial sense.

According to the 2025 UK Houzz & Home Study, 51% of homeowners renovated in 2024, up from 48% the previous year. With much of the UK's housing stock ageing (over half of renovating homeowners live in properties built before 1940), repairs and system upgrades remain a key driver of this activity.

It isn't just about necessity, though. Improvements can add genuine value to your property and make it more functional and appealing to live in.

These figures are indicative only and vary by location and market conditions. While you won't typically get back every pound you spend, strategic improvements often pay for themselves, especially if you plan to stay in your home long-term and enjoy the benefits along the way.

Before looking at each option in detail, here's how they compare:

With remortgaging or a further advance, you may be able to borrow more against your home for your improvements. When you increase your mortgage to release extra funds this way, it's known as additional borrowing.

An unsecured personal loan doesn't require you to put your property up as security. The lender assesses your creditworthiness and income, and your personal circumstances influence your eligibility and the rate you're offered.

How unsecured loans work

You borrow a set amount, typically £1,000-£25,000 for home improvements, and repay it in fixed monthly instalments over 1-7 years. The rate you're offered depends on your credit score, income, and how much you want to borrow. Once you accept an offer, you'll need to carefully review and sign the loan agreement before any funds are released.

Advantages of unsecured loans

• Your home isn't at risk. Non-payment will damage your credit score and could lead to legal action, but your property can't be repossessed specifically because of this debt.
• The application process is quick. Many lenders make fast decisions and can transfer funds within a few days of approval.
• Fixed monthly payments make budgeting simple. You know exactly what you'll pay each month throughout the loan term.
• No valuation or legal fees apply. Unlike secured loans or remortgaging, there's no need to pay for property valuations or conveyancing.

Disadvantages of unsecured loans

• Borrowing limits are lower. Most lenders cap personal loans at £25,000, with some stretching to £50,000 for existing customers with excellent credit.
• Interest rates are typically higher than secured options. Without your property as security, lenders charge more to offset the risk.
• You need a decent credit score. While some lenders accept fair credit, the most competitive terms go to those with a strong credit history.
• Shorter terms mean higher monthly payments. Repaying over five to seven years instead of fifteen to twenty-five years significantly increases what you pay each month.

Who unsecured loans suit

• Projects costing £5,000-£25,000
• People with good or excellent credit scores
• Those who want to avoid putting their home at risk
• Homeowners who need money quickly
• Renters or those with little home equity

A secured loan, also called a homeowner loan or second charge mortgage, uses your property as collateral. It runs alongside your existing mortgage as a separate agreement with its own term and monthly payment.

How secured loans work

You borrow against the equity in your property - the difference between what your home is worth and what you owe on your mortgage. Most lenders require you to retain at least 15-20% equity after the loan. A number of factors affect the rate you're offered, including your loan-to-value ratio, credit score, loan amount, repayment term, employment status, and property type.

Example equity calculation:

• Property value: £300,000
• Outstanding mortgage: £180,000
• Available equity: £120,000
• Maximum borrowing at 85% loan-to-value: £75,000 (leaving you with 15% equity)

The lender secures their loan against your property as what's known as a second charge, meaning if you sold the property, or it was repossessed, your mortgage would be paid first, then the secured loan.

Advantages of secured loans

• You can borrow larger amounts. Secured loans start around £10,000 and can extend to £500,000 or more, depending on your equity and affordability.
• Lower interest rates than unsecured loans. Because your property provides security, lenders typically charge less, though rates are usually higher than mortgage rates.
• Longer repayment terms spread the cost. Terms of up to 30 years mean lower monthly payments, making larger projects more affordable.
• More accessible with imperfect credit. Lenders focus on your equity position as well as your credit score, making approval more likely if you've had past financial difficulties.
• You keep your existing mortgage. Unlike remortgaging, your current mortgage deal remains untouched. This matters enormously if you have a competitive rate you'd lose by remortgaging.

Disadvantages of secured loans

• Your home is at risk. If you can't keep up with repayments, the lender can ultimately repossess your property. This is the biggest consideration with any secured borrowing.
• Setup costs add up. Expect to pay arrangement fees (typically 1-5% of the loan), a valuation fee, and potentially a broker fee. These can add £1,000-£3,000 or more to your total costs.
• The application process takes longer. Unlike a personal loan that can be approved in hours, secured loans typically take 2-6 weeks due to property valuations and legal work.
• Early repayment charges often apply. If you want to pay off your loan early, you might face penalties, especially in the first few years.

Who secured loans suit

• Projects costing £10,000-£500,000
• Those who can't access unsecured lending because of credit issues
• Homeowners wanting to keep an existing, competitive mortgage deal
• People who'd face high early repayment charges on their mortgage
• Those who'd pay more overall by remortgaging to a higher loan-to-value band
• Self-employed people who may struggle with strict remortgage criteria

Remortgaging means replacing your existing mortgage with a new one, either with your current lender or a different provider. By borrowing more than you currently owe, you release equity as a lump sum for your improvements.

How remortgaging works

You apply for a new mortgage that's larger than your outstanding balance. The new lender pays off your old mortgage, and you receive the difference in cash.

Example:

• Current mortgage balance: £180,000
• New mortgage: £220,000
• Cash released: £40,000 for home improvements

The new mortgage has its own rate and term. Your monthly payments then cover both the original borrowing and the additional amount.

Advantages of remortgaging

• Potentially lower interest rates. Mortgage rates are typically lower than secured loan rates because they're first charge lending, which carries less risk for the lender.
• One monthly payment to manage. Instead of juggling a mortgage and a separate loan, everything sits under one agreement.
• An opportunity to improve your overall deal. If you're on your lender's standard variable rate, remortgaging lets you move to a new fixed or tracker deal while releasing funds.
• Long repayment terms keep payments manageable. Spreading additional borrowing over 20-25 years reduces the monthly cost compared with shorter-term loans.

Disadvantages of remortgaging

• Early repayment charges can be significant. If you're in a fixed-rate period, leaving early might cost thousands. Always check your current mortgage terms before assuming remortgaging makes sense.
• The process takes time. Expect 4-8 weeks from application to completion, involving valuations, credit checks, and legal work.
• Additional borrowing increases your overall debt. You'll owe more against your property, potentially for decades.
• Your rate applies to the entire balance. Unlike a secured loan, where only the new borrowing attracts the new rate, remortgaging means your existing balance also moves to the new rate.
• Your circumstances must meet current lending criteria. If your income has dropped, you've become self-employed, or your credit has worsened since your original mortgage, you might not qualify.
• You'll pay fees. Legal, valuation, arrangement, and potentially broker fees typically add £500-£2,000 or more.

When remortgaging makes sense

• Your current fixed or introductory deal is ending
• You're on a standard variable rate and would benefit from a new fixed deal
• You have plenty of equity and good credit
• You're not facing early repayment charges
• You need a large sum, £30,000 or more, over a long term

When a secured loan might suit you better

• You're in a competitive fixed-rate deal with years remaining
• Early repayment charges would be significant
• Your credit score has dropped since your original mortgage
• You've recently become self-employed without 2-3 years of accounts
• A new mortgage at your required loan-to-value would come with a higher rate
• You want the flexibility to pay off the additional borrowing separately

For smaller projects, a 0% purchase credit card can provide interest-free borrowing if you can repay within the promotional period. In some cases, a credit card may be more suitable than a loan for smaller home improvements.

How 0% cards work

You're given a credit limit, typically £500-£15,000, and make purchases that don't attract interest for a promotional period, often 12-20 months. As long as you make minimum monthly payments and clear the balance before the 0% period ends, you pay no interest.

Advantages

• No interest costs if you repay in time. This makes credit cards one of the cheapest options for projects you can afford to pay off relatively quickly.
• Flexibility. Draw down as needed rather than borrowing a lump sum upfront.
• Section 75 protection. Purchases between £100 and £30,000 made on a credit card are protected by law if the retailer doesn't deliver or goes out of business.

Disadvantages

• Credit limits may be too low. You might need £10,000 but only be offered £3,000.
• The revert rate is steep. Once the 0% period ends, the rate that applies to any remaining balance increases substantially.
• Minimum payments barely touch the balance. If you only make minimums, you won't clear the debt before the promotional period ends.
• Requires excellent credit. The best 0% deals go to those with the strongest credit scores.

Who 0% cards suit

• Projects under £5,000-£10,000
• People with excellent credit
• Those confident they can clear the balance within the promotional period
• Staged projects where you're spending gradually

A further advance means borrowing additional money from your existing mortgage lender without remortgaging to a new provider. This is also known as additional borrowing, and it may let you borrow more on your existing mortgage to pay for home improvements.

How further advances work

You apply to your current lender for extra borrowing. If approved, this additional amount sits alongside your existing mortgage, sometimes at the same rate, sometimes at a different rate depending on the product.

Advantages

• Simpler than remortgaging. No need to switch lenders, which reduces paperwork and potentially fees.
• You keep your existing deal. Your original mortgage terms stay the same; only the new borrowing has separate terms.
• It can be quicker. With no new lender involved, the process can move faster than a full remortgage.

Disadvantages

• Not always available. Your lender might not offer further advances, or may decline your application.
• The rate may not be competitive. The rate on the additional borrowing might not match what you'd get elsewhere.
• It still requires affordability checks. Your lender will assess whether you can afford the extra repayments.

When to consider a further advance

• Your current lender offers competitive terms on additional borrowing
• You want to avoid switching lenders
• You're happy with your existing mortgage and just need extra funds

The amount you can borrow depends on which route you choose and your personal circumstances.

Unsecured personal loans

Most lenders offer £1,000-£25,000, with some extending to £50,000 for existing customers. Your income, credit score, and existing debt levels determine your limit.

Key affordability factors:

• Gross annual income
• Existing monthly commitments
• Credit score and history
• Employment status

Secured homeowner loans

Borrowing depends on:

• Your property value
• Your outstanding mortgage balance
• Your available equity
• The lender's maximum loan-to-value, typically 85-90%
• Affordability based on your income and outgoings

Example: a property worth £400,000 with a £200,000 mortgage has £200,000 equity. At an 85% maximum loan-to-value, you could borrow up to £140,000, bringing total lending to £340,000, or 85% of the property value, subject to affordability.

Remortgage with capital raising

Similar equity-based calculations apply, but you're also limited by current mortgage lending criteria, your ability to pass affordability assessments, and maximum loan-to-income ratios.

Understanding loan-to-value

Loan-to-value, or LTV, is the percentage of your property's value that you're borrowing. It's calculated as total borrowing divided by property value, multiplied by 100.

Example:

• Property value: £300,000
• Existing mortgage: £180,000
• New secured loan: £45,000
• Total borrowing: £225,000
• Loan-to-value: 75%

Lenders use loan-to-value to assess risk. A higher figure means less equity buffer if property prices fall, so lenders typically charge more for higher loan-to-value borrowing. When planning your project, consider how much you actually need versus how much is available. Borrowing to the maximum when a smaller amount would suffice can cost more overall and limit your future flexibility.

Lenders use their own valuation, not your estimate or what you originally paid, to work out your loan-to-value. If the valuation comes in lower than expected, you might be able to borrow less than planned. Factors that can affect a valuation include local market conditions, property condition, non-standard construction, short leasehold terms, and unusual features or locations.

Your credit score influences which products you can access and the terms you're likely to be offered.

What credit scores mean

UK credit scores vary by agency:

• Experian: 0-999, where 720+ is considered good and 881+ is considered excellent
• Equifax: 0-1000, where 531+ is considered good and 811+ is considered excellent
• TransUnion: 0-710, where 604+ is considered good and 628+ is considered excellent

How lenders use credit information

Lenders don't just look at a single number. They review your payment history on existing credit, outstanding balances and credit utilisation, the length of your credit history, recent applications (hard searches), and any adverse markers such as defaults, CCJs, or bankruptcies.

Credit score requirements by product

• Unsecured personal loans, most competitive terms: typically need a 700+ Experian score or equivalent
• Unsecured personal loans, any approval: some lenders accept lower scores, though on less favourable terms
• Secured homeowner loans: more flexible, as your property provides security. Specialist lenders accept applicants with adverse credit markers.
• Remortgaging: mainstream lenders typically want a clean credit history. Specialist mortgage lenders consider impaired credit, usually on less favourable terms.

Improving your chances before applying

If your project isn't urgent, spending a few months improving your credit position can help:

• Pay down existing credit card balances to below 30% of their limits
• Make sure you're on the electoral roll
• Check for and dispute any errors on your credit report
• Avoid applying for other credit in the months before your application
• Don't miss any payments on existing commitments

Understanding total costs, not just monthly payments, helps you make an informed decision.

Setup costs

Unsecured personal loans: usually no fees, though some lenders charge arrangement fees of around 1-3%.

Secured homeowner loans: arrangement fees of around 1-5% of the loan amount, a valuation fee, and potentially a broker fee and legal fees. Total setup costs are typically £1,000-£3,000 or more.

Remortgaging: arrangement, valuation, and legal fees, plus any early repayment charge on your existing mortgage. Total setup costs are typically £500-£5,000 or more, depending on early repayment charges.

Interest costs over time

The longer you borrow over, the more interest you're likely to pay overall, even if the rate itself is lower. A longer term reduces your monthly payment, which can make a larger loan feel more affordable, but it also means paying interest for more years. Always ask for a full cost comparison covering the total amount repayable before choosing a term, not just the monthly figure.

Taking on debt for home improvements carries risks you need to understand and accept before proceeding. All lending is subject to status, meaning approval and the terms offered depend on your individual financial circumstances and creditworthiness.

When comparing options, check the flexibility your lender offers. Many lenders allow overpayments without extra fees, which can help you clear your loan faster and reduce the total interest paid.

Your home is at risk with secured borrowing

Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. With secured loans or remortgaging, your property provides the security. If you can't make repayments, the lender can ultimately repossess your home and sell it to recover their money. Only borrow what you can genuinely afford to repay, even if your circumstances change.

Improvements don't always add value

While renovations can increase property value, not every project pays for itself. An elaborate, highly personal feature that appeals to you might not appeal to buyers. Be realistic about whether your improvements will genuinely add value, especially if you're borrowing to fund them.

Projects often cost more than expected

Budget overruns are common with home improvements. Around 2 in 5 renovators overspend their budget by an average of 20%, according to industry surveys. Build contingency into your borrowing, or at least have a plan if costs escalate.

Interest rates can change

Variable rate products mean your payments could increase. Even if you fix initially, you'll eventually need to refinance or move to a variable rate. Consider how you'd cope if your repayments rose.

Think carefully before consolidating other debts

If you're using a home improvement loan to also consolidate other debts, think carefully. While this can reduce your monthly outgoings, you're typically extending the repayment period significantly, which usually means paying more interest overall. You're also converting unsecured debt, such as credit cards or personal loans, into debt secured against your home, which increases the risk.

If you're struggling with existing debts or worried about keeping up with repayments, free and confidential guidance is available from MoneyHelper at moneyhelper.org.uk or by calling 0800 138 7777.

Unsecured personal loans

1. Check your credit score using a free service
2. Use eligibility checkers to see your likely approval odds without affecting your credit score
3. Compare rates from multiple lenders
4. Apply online or by phone
5. Receive a fast decision, often the same day
6. If approved, funds typically arrive within a few days

Secured homeowner loans

1. Calculate your equity position
2. Use an advisor to compare options across multiple lenders
3. Provide initial information for a preliminary assessment
4. If eligible, submit a full application with supporting documents (ID, income proof, bank statements)
5. The lender arranges a property valuation
6. Underwriting and legal processes complete
7. The loan completes and funds are released, once you've signed the loan agreement setting out the final terms

Typical timeline: 2-6 weeks.

Remortgaging

1. Check your current mortgage terms and any early repayment charges
2. Get a rough property valuation
3. Compare remortgage deals (an advisor can help)
4. Submit an application with supporting documents
5. Property valuation
6. Mortgage offer issued
7. Legal work by solicitors
8. Completion and fund release

Typical timeline: 4-8 weeks.

Having defaults, missed payments, or other credit issues doesn't necessarily rule you out of borrowing for home improvements, but it does limit your options and increase costs.

Bad credit

Unsecured loans: difficult to obtain with poor credit. Specialist lenders exist but charge significantly higher rates.

Secured loans: more accessible because your property provides security. Specialist lenders assess cases individually, weighing credit history against equity and affordability.

Remortgaging: more challenging. Most mainstream lenders have minimum credit score requirements, though specialist mortgage lenders exist, typically at less favourable rates.

We work with specialist lenders who consider applications that mainstream providers decline. Having adverse credit doesn't mean you can't borrow, but getting advice from a broker who compares a wide range of lenders matters enormously.

Self-employment

• For unsecured loans: you typically need two or more years of accounts or tax returns.
• For secured loans: more flexibility exists. Some lenders accept bank statements instead of formal accounts, making approval easier if you've recently become self-employed.
• For remortgaging: standard lenders usually require 2-3 years of accounts, though specialist lenders may accept one year.

Age

Older borrowers face term restrictions, as most lenders require loans to be repaid by a set age, typically between 70 and 85.

• At 55: full loan terms are usually available
• At 65: you may be limited to 10-20 year terms, depending on the lender
• At 70+: specialist later life lending products exist, including some that extend into your late eighties or nineties at completion

Rental properties and buy-to-let

Financing improvements to a rental property differs from your main home. Standard homeowner loans typically don't apply. Options include remortgaging the buy-to-let property, buy-to-let bridging finance, or a commercial secured loan.

Understanding what projects actually cost helps you plan realistic borrowing.

Kitchen renovations

According to the 2025 UK Houzz Kitchen Trends Study, median kitchen renovation spend increased 34% year-on-year to £17,500. Costs vary enormously:

• Budget refresh (£5,000-£10,000): repainting existing cabinets, new worktops, new flooring, updated hardware, basic appliance replacement
• Mid-range renovation (£12,000-£25,000): new cabinet fronts or full units, quartz or granite worktops, new flooring and tiling, quality appliances, some layout changes, professional installation
• High-end transformation (£25,000-£50,000+): bespoke or premium cabinetry, premium worktop materials, top-brand appliances, significant layout changes, structural alterations, designer input

Kitchens typically add 5-8% to property value, making them a popular improvement with a good return.

Bathroom renovations

• Budget bathroom (£3,000-£6,000): new suite (toilet, basin, bath or shower), basic tiling, new flooring, standard fixtures
• Mid-range bathroom (£6,000-£12,000): quality suite with design features, full tiling, underfloor heating, good fixtures and fittings, professional design input
• Luxury bathroom (£12,000-£25,000+): designer suite, premium materials throughout, walk-in shower and freestanding bath, smart features, bespoke joinery

Extensions

Costs vary significantly by location, with London and the South East commanding premiums of 20-30% over national averages.

• Single-storey rear extension (20-30 sqm): national average £30,000-£60,000; London £45,000-£90,000
• Double-storey extension: national average £50,000-£100,000; London £75,000-£150,000+
• Side return extension, popular in Victorian terraces: national average £25,000-£50,000; London £40,000-£80,000

Extensions typically add value roughly equal to their cost in many areas, though the quality of the finish and local market conditions affect returns.

Loft conversions

• Velux loft conversion (roof windows, no structural changes): £15,000-£30,000
• Dormer loft conversion: £25,000-£50,000
• Mansard conversion (structural changes to the roof): £45,000-£75,000+

Loft conversions with an additional bedroom and bathroom can add up to 20-25% to property value, according to Nationwide.

Energy efficiency improvements

With energy costs a major concern, many homeowners prioritise efficiency upgrades:

• New boiler: £2,500-£5,000
• Full central heating system: £4,000-£10,000
• Heat pump installation: £8,000-£15,000 (grants may be available)
• Double glazing (3-bed house): £5,000-£12,000
• Loft insulation: £300-£600
• Cavity wall insulation: £400-£1,000
• Solar panels: £5,000-£10,000

These improvements don't always add equivalent value to your property, but they reduce running costs and improve EPC ratings, which increasingly matter to buyers.

Understanding the regulations that protect you when borrowing helps you spot reputable lenders and avoid problems.

Financial Conduct Authority regulation

All UK consumer credit, including personal loans and secured homeowner loans, is regulated by the Financial Conduct Authority. This means lenders must be authorised and follow the Financial Conduct Authority's rules, affordability must be properly assessed, clear information about costs must be provided, and you have access to the Financial Ombudsman Service if things go wrong.

Your consumer rights

Pre-contract information: before signing, lenders must provide standardised information explaining the loan's key features, including the total repayable amount, the representative rate, monthly payments, and any fees.

Cooling-off period: for most regulated credit agreements, you have 14 days after signing to withdraw without penalty, though you'd repay any money borrowed, plus interest for the period it was held.

Complaint rights: if you're unhappy with how a lender has treated you, you can complain directly to them first, then escalate to the Financial Ombudsman Service if it isn't resolved.

Early repayment: you have the right to repay early, though fees may apply. Lenders must tell you about any early repayment charges upfront.

The repossession process

If you have a secured loan and fall behind with payments, a lender can't simply take your home. The process typically involves missed payments and arrears building, contact from the lender to discuss the situation, formal demand letters, court action to obtain a possession order, a court hearing where you can present your circumstances, and, if possession is granted, a date being set for repossession and sale.

This process takes months and involves multiple opportunities for resolution. Courts prefer to see a payment arrangement rather than repossession. If you're struggling, contacting your lender early gives you the best chance of finding a solution.

Using a broker

Brokers are also regulated by the Financial Conduct Authority and must act in your best interests. Working with a broker gives you access to lenders who only work through intermediaries, a comparison across multiple providers, expert guidance on which product suits your circumstances, and someone to chase progress and handle complications on your behalf.