Whether it is enlivening the lost spirit back of mildewed and peel-off walls or accessing empty space, the home refurbishment has never been a cinch. Even though you cut corners, it is expensive, and stowing away is not always an option.
Despite having set aside some money, doing up your house could cost you an arm and a leg. This is when you will need a home improvement loan. As the name suggests, money borrowed to revamp your house is known as a home improvement loan, a small loan to be paid back over a period of time, typically within a few months.
A home improvement loan is not a particular type of financial product, meaning this name knows any loan used for the purpose of renovation. Regardless of the renovation project you want to take up, you can take out a personal loan, secured loan or guarantor loan.
How do these loans differ from each other?
All of these loans have different pros and cons and are suitable only for a specific kind of need. Your renovation project will decide how much you would need to borrow. The table below shows the upsides and downsides of both personal and secured loans.
|Personal loans||Secured loans|
|You can borrow small amounts of money, generally up to £5,000.||Not ideal for big renovation tasks.||Depending on the lender's policy, you can borrow a large amount of money.||The amount you borrow cannot exceed the house’s value and how much you owe.|
|Monthly payments will make it easier to repay the loan.||Bad credit borrowers will likely struggle to get the nod.||Approval is high despite a bad credit score.||You can lose your house or other security if failed to keep up with payments.|
|No collateral is required.||Interest rates could be high.||You will have a longer time to pay back.||You cannot borrow less than £5,000.|
Guarantor loans come in handy when you have a bad credit rating and are unable to qualify for personal loans. A guarantor could be anybody, including your spouse, who has a good credit report and will be responsible for making up for the losses caused to a lender due to your defaults.
The good thing about these loans is that you can quickly get approval for a personal loan in Ireland and do not need to secure the borrowed sum against the collateral. However, this also comes with a few drawbacks too.
- You will not be able to borrow a large sum of money. Some lenders might put a cap on £1,000.
- Finding a suitable guarantor could be hard.
- Do not forget that if you fail o keep up with payments, it will affect the credit score of a guarantor as well.
How can you get a home improvement loan?
Here is how you can avail yourself of home improvement loans without getting into hassle.
- Know what you want
Before you apply to a lender for a home improvement loan, you need to know the purpose of doing so. Try to figure out how these changes would affect the value of your property. Some people assume that they will be able to sell it at a higher price, but unfortunately, it does not increase that much.
Remodelling work should be allowed as long as it is necessary. Focus on the condition of walls, faucets, switches, doorknobs, floors, and cabinets. Installing an expensive and luxurious interior does not make sense, especially when you are looking to borrow money.
- Check your affordability
A lender will assess your repaying capacity even if they have a chance to liquidate your collateral to get their money back. In order to avoid being turned down, you should look over your financial statement.
Make sure that you will have enough money to pay back the debt without having difficulty meeting your recurring expenses. Use the online loan calculator to get the estimated cost. This will help you know the estimated monthly cost.
You can take into account these figures to make a decision, not to forget that you will have to allow for extra money in that the actual cost will be higher.
- Find out a loan that fits your needs
Various direct lenders are out there that will let you apply for these loans. However, you should do your homework so that you do not end up with an expensive deal. Whether your credit score is good or bad, you should compare interest rates.
Ask them about processing fees, monthly fees, and upfront fees. These factors play a paramount role in making loans expensive. Make sure you do not borrow more money than you need. The less you borrow, the better it is.
- Check your eligibility
When it comes to applying for the best home improvement loans in Ireland, people think that they are eligible for them as long as they have come of age. While it is necessary to be 18 years old, you must also meet other conditions.
Your credit score should be good. Lenders have set a bare minimum even in case of bad credit ratings. Your credit score cannot be lower than that. Visit the lender's website to see which scores they accept. If not given on the website, talk to their customer support team to get information about it.
Otherwise, your application might get rejected, and hard inquiries showing up on your credit report will further take a toll on your credit score.
To sum up
If you have decided to do up your house, first analyse that it is the right decision. Check your financial capacity, so you do not struggle to pay off the debt. It is essential to check your eligibility, meaning your credit score and whether you meet the criteria, a lender has set.
Do research before you apply for the loan. If you are unable to come down on one side of the fence or the other, take advice from a financial advisor.