Here at Bamboo, we’re always interested in looking at how people spend their money, how people can save money (or tighten the purse strings here and there) and – seeing as we’re a loan specialist – why people borrow money and what they use it for. Some people get personal loans to get married, some people get personal loans to buy a car, but according to a new study, nearly a quarter of UK borrowers take out personal loans for home improvement.
That means that, statistically at least, one in every four people has borrowed money to improve their home.
Are personal loans for home improvement a good idea?
That’s a good question – and one that needs to be answered in two parts.
Firstly, is borrowing money to improve your home a good idea? And then, if so, are personal loans for home improvement the best option for borrowing? So, let’s start with part one.
Is borrowing money to improve your home a good idea?
Of course, this depends on your situation. If you’ve got a lot of money in savings, it might be sensible to dip into those and avoid paying interest on a loan or credit card. But if you don’t have a rainy day fund ready to dip into, then borrowing to fix your home up can be a great idea, especially when you consider the potential value you’ll add to the house. Depending on the work you have done, you can add a lot of value to your property. A conservatory, for instance, can cost between £3,000 and £10,000 (depending on quality and size) but can add around 5% to the value of your property.
For easy maths, let’s say your house is worth £200,000. A £3,000 conservatory might end up adding £10,000 to the value of your property.
Likewise, a loft conversion might cost between £15,000 and £40,000 (which is a pretty eye-watering amount) but can add 10% to the value of your property. A £15,000 loft conversion would add £20,000 to the value of our hypothetical £200,000 house. Not bad, eh? We’ve written about home improvements before. If you’re still on the fence, why not check it out?
And now onto part two…
Are personal loans for home improvement the best option?
Again, this all depends on your situation, your finances and, importantly, the type of work you’re looking to have done.
If you’re in a position to remortgage your house and you’re looking to undertake massive renovations – an extension or big loft conversion, for instance – then you might be better going down the remortgage route. At the other end of the scale, things like redecorating, laying new carpet or getting a new bath probably don’t warrant a personal loan. Unless, of course, you want to borrow a small amount of money to build your credit rating.
The sweet spot when it comes to personal loans for home improvement is the middle ground; medium-sized projects that cost a couple of grand and that add a lot of value to the property.
A new bathroom or kitchen, a conservatory or laying decking in the garden are all great examples that add a lot of value to your property and fit into that nice price range.
Thinking of applying for a personal loan for home improvements?
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%. A guarantor may be required.