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

Pros

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

Cons

  • 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

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you.

More guides on Finder

  • Secured loan calculator

    Use our free secured loan calculator to find out how much you could borrow and check your eligibility with multiple UK lenders in minutes.

  • Loans Warehouse review

    Learn more about how credit broker Loans Warehouse works.

  • Fluent Money secured loans review

    Learn more about how credit broker Fluent Money can help you find a secured loan.

  • Compare 10-year loans

    Find out how to apply for a 10-year personal loan, and how to get the best rates.

  • How to get a £200,000 loan

    If you’re considering applying for a £200,000 personal loan, check out this guide which explains how to compare lenders and find the best deal.

  • How to get a £150,000 loan

    If you’re considering applying for a £150,000 personal loan, check out this guide which explains how to compare lenders and find the best deal.

  • How to get a £100,000 loan

    If you’re considering applying for a £100,000 personal loan, check out this guide which explains how to compare lenders and find the best deal.

  • Long-term loans

    Long-term loans can help lower your loan repayments, even if you have bad credit. Compare your options now.

  • Secured debt consolidation loans

    A secured loan can help you consolidate your existing debt by offering lower rates and more flexible loan terms.

  • Short term secured loans

    Short term secured loans let you borrow up to £2.5 million with more competitive rates, but also help to keep your overall interest costs down.

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site