Financing home improvements with bad credit: our top tips

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Extensions. Loft conversions. Redecorating. New windows. Finally fixing that problem. Everybody has long lists of home improvements that they’re hoping to get around to at some point. But – as well as trying to find the time to do it – there’s another problem that stops a lot of people from just getting on with it: home improvements are expensive. And financing home improvements with bad credit can be a bit of headache.

Luckily, we’re here to help. And to tell you that financing home improvements with bad credit doesn’t have to be hard or stressful. In fact, there are quite options you can choose from to make the process a lot easier.

Financing home improvements with bad credit: the options:

According to information collected from NAEA, Movewithus and Trade Advisor, a loft conversion can add 10% onto your property value – but at the cost of between £15,000 and £40,000.

Similarly, a conservatory can add up to 5% onto the value of your property and cost between £3,500 and £10,000.

Our point is: home improvements aren’t just about making your home a nice place to live (although, that’s a massive benefit) – they’re also worthy investments that can pay dividends when it comes to selling your house. (We’ve written about this in a bit more detail before, if you’re interested just check out our home improvement guide.)

But what are your options for financing home improvements with bad credit?

Option 1: Remortgage your house

If you own your house, it might be worth speaking to your mortgage broker to see if you can borrow more money against the value of your house to finance your home improvement plans. Of course, with bad credit, it’s possible that you’ll be offered higher rates on the money you borrow than your current mortgage. And if you don’t have much equity (by which we mean, you don’t technically own that much of your house) you may find it hard to find a decent rate or even a loan!

Remortgages are tricky and complicated things – if you’re thinking about applying for one to fund home improvements, we highly recommend seeking financial advice. Remortgages are dependent on lots of individual circumstances, so be sure to find somebody who knows what they’re talking about to get the best advice.

However, for a 5-minute introduction to remortgages, check out this video by Martin Lewis:

Option 2: Dipping into your savings

If you’ve got savings, then home improvements can be a good time to dip into them. As we said, extensive renovations can add a lot of value to your property, meaning that you might be able to earn more money by investing it in your property than you would if you left it accumulating interest.

However, this option isn’t without its disadvantages – especially for those with limited savings. For a start, you’re dipping into your safety net. If things go wrong after you’ve had new windows, for instance, you’ve got nothing to fall back on. On top of that, paying cash doesn’t offer you the same security (or paper trail) that paying with a credit card does. Which leads us nicely onto…

Option 3: Use a low-interest credit card

If you’ve got a low-interest credit card (or qualify for one) – they can be a great way of spreading the cost out over a few months and breaking it into manageable chunks.

Even better, if you can find a 0% offer on a new credit card, then as long as you pay off the balance before the offer is up, then you’ve borrowed the money for free. Not bad, eh?

However, the main of advantage of using a credit card is the credit card protection.

As Money Supermarket point out, ‘credit card protection provides you with a level of protection relating to anything you buy costing between £100 and £30,000. If a company that’s sold you something goes bust before the item is delivered, or if it’s broken and the supplier won’t sort things out, you can still get a refund from your credit card provider.’

Which means, if you buy new windows and the company goes bust or your builder declares bankruptcy mid-job, you can get all of your money back without a problem. Under Section 75 of the Consumer Credit Act, credit cards must provide protection for a purchase above £100 and below £30,000, which covers the vast majority of home improvement projects.

One of the problems with using a credit card is this: it isn’t a particularly great solution for financing home improvements with bad credit.

Firstly, if you’ve got a poor credit score, you’re likely to only qualify for credit cards with quite high interest rates that makes the cost of using a credit card less appealing. Secondly, because of the tempting nature of minimum repayments, there’s a chance that you’ll be repaying the money you borrowed for years, which can be costly.

That said, if you’re planning on paying the credit card off very quickly and would like the added piece of mind that comes with knowing you can get a refund if things go wrong, using a credit card is probably your best bet.

Option 4: An unsecured or guarantor loan

If you’re planning to carry out works on your house that come to less than £8,000 (and don’t want to pay cash or put it on a credit card) then a guarantor or unsecured loan could be the perfect solution for you.

Not only are guarantor loans a great way to finance home improvements with bad credit, but they can help your repair your credit score at the same time.

At Bamboo, we offer bad credit personal loans and guarantor loans for anywhere between £1,000 and £8,000 – if you’re considering borrowing money to do your house up but have bad credit, why not see how much you could borrow? If you’re approved, you could be on your way to repairing your credit score and your house within 24 hours. Representative APR 49.7%

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