Experts Guide to Choosing the Best Home Improvement Loans!

Michelle Tuvey Michelle Tuvey | Loan Underwriter

Are you thinking about obtaining a home improvement loan to complete some projects on your property? If so, you need to know that not all loans are created equally. Lenders offer different loan products with variable terms, interest rates, charges, and fees. Finding the best home improvement loans requires comparing multiple lenders and loan products.

Your choice of loans is one that should not be taken lightly. The loan you choose will directly affect how much you pay every month, as well as the total cost of borrowing over the life of the loan. An unwise choice could lead to you paying much more than you actually have to. Even worse, it could lead to the repossession and sale of your home should you default on your loan.

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Four Things to Compare

Secured Loan Experts has broken down the comparison process into four easy-to-remember components. By comparing these four components, you will get a good idea of which lenders are offering the best deals. The four components are:

  1. Loan Amounts – Lenders offer both minimum and maximum loan amounts. This is the first component that will help you take a large list of potential lenders and narrow it down to a short list. For example, there is no point in contacting a bank offering a maximum of £20,000 if you need a home renovation loan of at least £40,000.
  1. Representative APR – The representative APR is the estimated interest rate calculated by combining the standard APR with all of the known, upfront costs of borrowing. Most lenders' representative APRs end up being the best deal you can possibly get from them. However, keep in mind that you might be approved at a higher rate.
  1. LTV Ratio – The loan-to-value (LTV) ratio compares the value of your home – in this case, your equity – to how much the bank is willing to loan. That means a 75% LTV suggests you could borrow up to up to 75% of the equity in your property. A higher LTV ratio gives you more borrowing power.
  1. Loan Terms – Loan terms tell you how much time you have to pay off your loan. A longer term usually translates into lower monthly payments. Along with terms, you should also find out if there are any penalties for early repayment. Loans without such fees make it possible for you to choose a longer, more budget friendly term while also giving you the ability to pay early or if finances allow.

The first step in choosing the best home improvement loan is to compare these four things among multiple lenders and loan products. The next step is to take the information from your comparisons and apply it to your needs and budget guidelines.

Staying within Your Budget

We advise consumers to make a concerted effort to stay well within their budgets when obtaining home improvement loans. Why? Because financial circumstances can change very quickly. If you obtain a loan that pushes your budget to its absolute limits, you could quickly be in trouble should anything change. The loss of a job, an interest rate increase, or an unexpected illness could result in you being in arrears very quickly.

Always remember that your home could be repossessed and sold if you do not keep up with loan payments. You are better off accepting a lower loan amount in order to stay well within your budget than maximising your borrowing potential and straining your finances. Even the greatest loan offer is not so great if it ends up costing you your home.

Now that you know how to choose from among the best home-improvement loans, it is time to get busy comparing.  Leveraging the equity in your home is a great way to fund those home improvements you have been putting off for so long. It is a great way to use current equity to build more equity, by increasing the resale value of your property through home improvements.

If finding, comparing and choosing the best loan is not your kettle of fish or you just don’t have the time available to do the job don’t despair. Free help and advice is on hand through our team of home improvement loan experts.

Just call our friendly team and they will help you find the best offers from the whole of the market in a few minutes, compare these side by side to shortlist the ones that meet your needs and help you select the best deal that matches your circumstances. Once you have chosen the right offer they will use their knowledge of the lender to create and submit an optimised application on your behalf which shows your case in the best possible terms.

We work for you not the lender and are here to help you get the best deal possible.

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