Why you might want to improve your home
A home improvement loan can be a great way to make your property exactly as you would like it. This can be ideal if you’re in a situation where you don’t want or can’t afford to move. Updating your current property can be a more convenient and cheaper alternative. It can also help to add value to your property if or when you choose to sell.
Whether this is a loft conversion, new kitchen or extension; making improvements to your home will require a significant financial outlay. A home improvement loan can allow you to fund the changes you’re looking to make.
Using a secured loan for home improvements
But despite your personal circumstances, a secured loan can allow you to borrow significantly more than other alternatives, such as a personal loan or credit card. This is because the loan is secured against your property and is, therefore, less of a risk for the lender. As a result, interest rates for this type of loan can be lower depending on your circumstances.
You should be aware, however, that if you miss any of your monthly repayments you could be at risk of losing your home.
Alternative homeowner loan options
Other finance options offer safer unsecured borrowing but will generally only let you borrow up to £15,000 not lend as much as secured options.
A personal loan – also known as an unsecured loan – allows you to borrow money without the need to secure the loan against an asset. As these loans are can be a higher risk for lenders, you may have to pay a higher rate dependant on your circumstances. will likely pay a higher interest rate in comparison to some other finance options. It’s also unlikely that you will be able to take out a personal loan with a poor credit history.
Another option for borrowing money is using a 0% credit card. As long as you ensure you pay back the amount before the interest-free period ends, you won’t be charged for borrowing this money. The downside to this method is that you will need to limit your spending to what you need. In addition, you will also need a good credit score to be able to get the best deals.
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Why Clever Mortgages?
At Clever Mortgages we can offer you the support and advice required to ensure you get the right mortgage for your first home. We provide access to a comprehensive range of mortgages from across the market. We are also authorised and regulated by the Financial Conduct Authority (FCA) and adhere to the Treating Customers Fairly (TCF) guidelines, so you can be confident that we will treat you with integrity and only recommend products that meet your needs.
A fixed rate mortgage is where your interest rate stays the same for a set time period (usually between 2-10 years). As a result your repayments are exactly the same each month, regardless of what happens to other mortgage rates. These types of mortgages are popular with first time buyers and people looking to budget each month, especially those who have suffered from a poor credit history.
The main downside to a fixed rate mortgage is that if mortgage rates go down you can be paying a higher amount than you would on a variable rate mortgage. However, this can also go in your favour and if interest rates increase you can be paying less than you would on a variable rate.
Every lender will have their own standard variable rate (SVR), which is considered their basic mortgage. This interest rate goes up and down, usually in line with the Bank of England’s interest rates but the lender is free to raise this at any time.
This means that your monthly payments can go up or down depending on what the interest rate is at a given time. Some months you could be paying more whilst other months you could be paying much less.
A discount mortgage is when a reduction is applied to the lenders Standard Variable Rate (SVR) for a certain length of time (typically 2-3 years). Discount mortgages are attractive as they can allow you to pay slightly less than the bank's standard rate. However as the SVR can still fluctuate they are not ideal for people who are looking to stick to a strict long term budget.
A tracker mortgage is basically a type of variable rate mortgage. What makes them different from other variable rate mortgages is that they follow – track – movements of another rate, the most common rate that is tracked is the Bank of England Base Rate.
A capped mortgage is the same as a variable rate mortgage; however the interest rate can never rise above a set “cap”. These mortgages can work well for people who can budget for different mortgage repayments each month but want the reassurance that their payments will never go above a certain amount.
Offset mortgages are linked to a savings account as well as your current account. Your savings will be 'offset' against the value of your mortgage, and you'll only pay interest on your mortgage balance minus your savings balance. These types of mortgages work well for higher earners or people who have a good amount in savings that they want to use towards paying their mortgage.