home improvements

Funding Home Improvements: A Guide On Your Options 

Monday 02nd May 2022 |

Improving your home can be an exciting process but funding home improvements is a whole different story. Whether you want to renovate your bathroom, add an extension, or insulate your loft, this can become costly, and many people do not have the cash to fund home improvements without help.  

The main options for funding home improvements include extending your current mortgage, getting a remortgage, applying for a loan, or using credit cards and savings. It is a good idea to look into all your options before making a decision, as you may be able to get a better deal. Below we look at the options for funding your home improvements in more detail. 

Extending Your Current Mortgage 

If you have a mortgage already and have great interest rates, you may want to discuss with your lender whether extending your mortgage is an option. Not every lender does this and it will depend on how much more you want to borrow. Letting your lender know this is for home improvements can help the situation, as many lenders want to know the reasoning behind lending more.  

When extending your current mortgage, the interest rates may change and there may be additional fees for changing your mortgage repayments. This is why you should also look into remortgaging, as you may be able to find a better deal elsewhere.  

Getting A Remortgage 

Just as it sounds, a remortgage means moving your existing mortgage to a new lender. This then replaces your old mortgage and it can come in handy if you are looking to do improvements at home. Some lenders do not accept mortgage extensions and the rate to extend your mortgage may be higher than finding a new lender. Bear in mind if you want to remortgage, you may have to pay some fees to your current lender for ending the agreement early. This is usually found in your agreement, but you can also call the lender and check. The costs of this will depend on which lender you use.  

To remortgage, you will have to prove to the new lender that you can afford a larger mortgage and let them know why you are remortgaging. Even if you have bad credit, you can still get a remortgage, and this may be your best option if the interest rates on your current mortgage are high. Money Nest is a mortgage broker who specialises in finding mortgages and remortgages for those with bad credit. They understand that refinancing with bad credit is hard, but their team of specialists can assist you in finding a better deal, so you can improve your home. Remortgaging with bad credit could even save you money.  

Finding A Second Mortgage 

As well as extending your mortgage or remortgaging, you can get a second mortgage. This is often referred to as a secured charge loan. The issue with these is that the interest rates tend to be quite high, so this is not necessarily the best option. You should discuss all the options with a mortgage advisor, as they can help you make the right decision based on your earnings. Getting another mortgage means more monthly payments, which can be stressful if you lost your job. 

Applying For A Personal Loan 

Not everyone has a mortgage, or you may not want to get involved with changing your current mortgage. If this is the case, a personal loan could be your next option. Some lenders even have loans specifically for home improvements and you can shop around for the best deals online before making a choice. 

Some personal loans have low-interest rates to begin with, but these could accumulate over time. You should work out how long it will take you to pay the loan back and whether you would be able to afford this on top of your other outgoings, especially if you do have a mortgage as well. Home improvement loans are worth it for some people, but it depends on the interest rates you are eligible for. You can also check with your bank, as they may be able to offer you a great rate if you have been banking with them for years.  

Using A Credit Card 

Some home improvements do not cost as much as others, meaning remortgaging or getting a loan is not worth the interest rates. For smaller home improvements, using a credit card could be your best option. When you pay with a credit card, you also have protection if the traders you are working with go out of business.  

Credit cards tend to have higher interest rates than mortgages though, but this depends on what offers you can get. Some credit cards have an introductory offer where you pay no interest for a few months. If you believe you can save and pay off most of the credit card before the interest goes up, this could save you money and even improve your credit score. Shop around for the best deals online and see what you are eligible for. Knowing how much your home improvements are going to cost will help you find out which option is best. 

Saving For Home Improvements 

If none of the above seems suitable, or you want to lower the amount you are going to borrow, you should start saving for home improvements. Although this means putting improvements off for a later date, it could save you a lot of money in the future. To start saving for home improvements, you need to create a monthly budget. 

Calculating your incomings and outgoings makes it easier to see how much you could save. If you are only just making ends meet, it may be time to make some cuts in your life. Monthly subscriptions and unnecessary spending soon add up and now is a great time to improve your financial habits. Once you start saving, you will barely notice the difference. Improving your home is important, especially when you spend most of your time there.  

As well as saving money, you should look at how to lower the costs of your home improvements. This could be learning how to do some things yourself, so you don’t need to pay for a contractor to come in. Working with someone you know could also be cheaper and you could learn valuable skills that can help in later home improvements.  


Take a look at all the options available and see which one is best for you. Changing your mortgage can be a great idea, but this depends on whether you are happy to take out another mortgage for 25 years. Loans tend to have higher interest rates, but if you can pay them off quick enough you will still be able to improve your home without it costing the earth. Check your credit card eligibility or start saving for home improvements, so you can lower the amount you need to borrow.  

Improving your home is just one way to add value, which can be helpful for the future if you ever want to sell. This guide can help you understand all your options when it comes to funding home improvements. You can also speak to a mortgage advisor or lender for more information.  

The Best Places to Travel this year