A Look at Home Improvement Loans

By: James Hunaban

Any work carried out on your home is going to cost a great deal of money; a home improvement loan could be the way you can finance this work sooner rather than later. If you want a first rate home improvement job carried out with a guarantee then you will need to use professional tradesmen who should also speed the work up a great deal.

This type of home improvement loan has only one purpose, to improve your home but fortunately you do have the option of it either being a secured loan on your property or a loan where no security is required. The last responsibility a new homeowner wants is that of it being used as equity for a loan to improve it. Finance organized to improve a home is normally arranged to run for up to fifteen years when equity is not required.

There are, however county limits on how much money can be borrowed when it is for no equity finance and a lower limit imposed by the lenders which takes into account the joint income of both owners. Although a number of details of the applicant are looked into, these loans are relatively easy to arrange and there is not much documentation to complete.

If your property has increased in value over the years and is now worth more than you owe on it then you may prefer a home improvement loan that uses this spare equity. This is not the same as your original mortgage; instead, it is an additional loan that is often easier to obtain and process compared to a regular mortgage; usually providing lower interest rates than other types of finance.

The lender will only provide funds for a secured loan based on the current equity available in your property. This calculation is worked out using how much your home is worth, how much is owed, and of course if there are other loans or debts, as these will be included in the calculation.

All these factors will be considered for putting a loan package together for your consideration. Although it is not set in stone, the amount they are prepared to lend will be based on a percentage of the property valuation but some lenders will actually lend as much as a quarter again as the property is worth.

Over extending your ability to pay is the quickest way for a person to lose their home when they cannot keep up the repayments. Home improvement loans can be a wonderful way to tidy up an aging home but remember that they need to be paid off and if you are likely to struggle, reduce the amount you want to borrow.

Home Loans
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