Secured home improvement loans

If you're looking to fund improvements to your home, you can use the equity you already have in your house to get a loan.

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

Whether it’s renovating your kitchen, making much needed repairs or putting in a swimming pool (lucky you), home improvements are rarely cheap. It can be difficult to find the spare funds to cover the cost of improvements, especially if you’re still paying off your mortgage.

But if you’ve already built equity in your home, you can use it as collateral to apply for a secured loan, which you can then use to cover the cost of improvements. Compared to a regular personal loan, a secured loan generally offers more competitive rates and terms, meaning you’ll have more flexibility in how you pay it off. A secured loan also represents less risk to the lender, so you’re more likely to be approved than you would with an unsecured loan.

How does a secured loan work?

A secured loan, or homeowners loan, is a form of personal loan that requires that you use the equity you own in your house as security against the cost of the loan. This means that you’ll present less risk to the lender, as if you fail to make your repayments, the lender can take ownership of the equity to cover the cost of the loan.

As a result, you’re likely to be offered lower interest rates and longer loan terms than if you were to apply for a regular unsecured loan.

Can I get a secured home improvement loan with bad credit?

Yes, you should still be eligible for a home improvement loan even if you have bad credit, though you may be limited in the size of loan you can get, and may receive a higher interest rate compared to those with a good credit rating.

The advantage of a secured loan is that it uses your existing equity as security, so lenders are more likely to approve your loan on this basis. Your credit rating will have less of an impact on whether you’re approved than it would with an unsecured loan.

Pros and cons of secured loans for home improvements


  • More competitive rate
  • Larger loan amounts
  • Longer, more flexible loan terms
  • Can help increase the value of your house


  • May be forced to sell your house if you fail to repay the loan
  • Loan amount is limited by amount of equity you have

Who offers home improvement loans?

You can get secured home improvement loans from a range of specialist providers and lenders, including:

Many large banks and lenders also provide home improvement loans, though these are generally offered as unsecured loans:

What to keep in mind with a secured home improvement loan

With a secured loan, you’ll generally be able to borrow more than you would on a personal loan, which means it may be more suitable for those looking to take out expensive home improvements. However, the amount you can borrow will be limited by how much equity you have in your house.

The cost of home improvements and renovations can also vary dramatically, so it’s important that you have a firm idea of the likely cost of improvements before you apply for a loan. If you borrow less than you need, you may need to take out an additional loan to cover the expenses, and if you borrow too much, you’ll likely end up paying more in unnecessary interest.

Home improvements can help increase the market value of your house, but you would not realise any of this potential value unless you were to sell your house. It may not be worth going into debt and risking the equity you have in your house unless the improvements are vital, or justify the cost of the loan.

Other types of home improvement loans

Unsecured personal loans. If you don’t have enough equity in your house to cover a loan, you may want to consider an unsecured loan to fund your home improvements. An unsecured loan does not require any asset to be used as security, but as a result, you’ll likely receive a less favourable interest rate and more limited loan terms. It’s also generally harder to be approved for an unsecured loan, as the lender is taking on more risk.

Frequently asked questions

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