The Best Funding Sources for Home Improvement

Home improvements can cost you an arm and a leg even if you are to do it yourself. The most common reason for doing up your home is to sell it at good prices. However, some people renovate their houses to boost their quality of life. A survey has revealed that home renovation adds roughly ?5,000 to the value of your house.

If little contribution can add value to your home, you should not flinch from doing it over. You must have some money in your savings, although you can take out a loan to refurbish your home. Renovation does not require adding on a room or creating more space, but it instead means renovating doors and windows, roofs, ceilings, changing faucets, and painting walls.

You may need to borrow money even if you just have to give a fresh stroke of paint or have fixed your door hinges that set your teeth on edge when they give off a screeching sound. You may not have put in enough money to meet renovation expenses. This blog tells the funding sources that you might consider having your house renovated.

When you Need Money for Small Renovations

There are various funding sources you can seek for home improvement, but it depends on the cost of the project.

Sometimes you do not need a lot of money to borrow to repair your home. For instance, changing faucets or replacing damaged doors and windows will not likely cost you an arm and a leg. Therefore, you can seek the following small funding sources:


You will find savings as the best option if you have enough money to refurbish your house as you do not have to pay additional costs in the form of interest. When you borrow money to fund your home renovation project, you pay interest on top of the borrowed money, so the total cost will be much more than it would be if you used your savings.

Experts suggest that you should only rely on savings if you do not need to invest in a big refurbishment project. This will help save money as interest. Home repair projects are not usually unexpected.

They require long-term planning. If you know you will need to improve your house down the line, you should start saving money as soon as possible. By setting aside money beforehand, you will be able to have enough money in your savings account by the time you need it to do up your house.

Personal Loans

It is likely that you do not have enough savings to fund your remodeling project. You will likely turn to online lenders to borrow money. The best funding source is an unsecured loan, as you do not need to put in collateral. 

If you make a default, you do not have to lose any assets. However, you cannot escape your obligations. A default will hamper your credit score and make it harder for you to borrow money at a lower interest rate.

The lender will inform the collection agency of your defaults, and they will come into action to recover money from you. If you do not have a good credit history, you can apply for personal loans for bad credit in the UK.

Although these loans also require no conditions like collateral and guarantor, you must be careful about your repaying capability. Experts say you should not borrow more than your needs because these loans carry higher interest rates than those for good credit borrowers.

Credit Cards

Credit cards can be the best option when your savings have fallen short of the cost of home revamping. As you just need a little amount of money to fill the gap, you can easily use your credit card balance.

You can avoid paying interest as long as you immediately clear the dues when the bill is generated. Since the amount is not big, it will not be possible for you to clear the balance in a lump sum.

When you Need Money for Big Repair Work

It is likely that you may need to borrow a large amount of money to renovate your house. Here are the funding sources you will seek:

Secured Personal Loans

Secured home improvement loans are like unsecured loans, with the only difference being that they are subject to collateral. As you are borrowing a large amount of money, a lender will ask you to put collateral to mitigate the risk associated with lending you money.

Since you will put collateral, a lender will not hesitate to let you borrow a large amount of money. Further, you will avail of low-interest rates. You will be able to get money when you have a bad credit rating too.

Home Equity Loan

A home equity loan is also a great option when you need a big amount of money to fund your home renovation project. In other words, it is described as a second mortgage. Once you have built the equity, you can borrow money against it.

The money you get as a loan will be the difference between your home?s current market value and the due mortgage balance. These loans generally tend to be at a fixed rate. You will likely avail of low-interest rates if you have a stellar credit rating. A lender will also examine your repaying capacity.

Which Funding Source is the best?

It depends on your needs and the risks associated with each funding source.

Funding SourcesBenefitsRisks Associated
SavingsNo additional cost in the form of interestYou will likely have little or zero money for emergencies. Try to keep a buffer for a rainy day.
Unsecured Personal LoansReliable for small improvementsYou do not need to put in collateral and a guarantor.Fixed monthly payments over a span of timeIt can be expensive as they carry high interest rates.Shop around, so you choose the best deal.Try to have a good credit rating; otherwise, they will be more expensive.
Secured Home Renovation LoansGod funding source for large renovation projectsYou can borrow more because of collateral.You will likely avail of competitive interest rates.Despite putting in collateral, these loans can be expensive.You may lose your home when you make a default.Your credit score will be brutally damaged.
Credit CardsIdeal for filling the gap when your savings have fallen short of the renovation cost.You can avoid interest by paying off the balance within the grace period.They seem to offer more peace of mind compared to alternatives.Not all credit cards may come with that limit.If the interest-free period is over, you will likely end up paying a very high-interest rate.In the case of instalment payments, they will likely be higher when the fixed-rate period is over.
Home Equity LoansLet you borrow a large amount of money.You will get money at affordable interest ratesFixed payments make it more manageable.These loans are extremely risky.You can lose your home if you make a default.Interest rates vary by lenders, so be careful.

Final Words

You can use various funding sources for refurbishing your house. However, each of them has its own pros and cons. You should evaluate them before taking the plunge. Further, it depends on your needs, credit profile and repaying capacity too.