6 Easy Ways to Pay for Home Improvements

by NickC from money.co.uk

Home improvements can be expensive, and the last thing you need is to be stung with hefty interest charges on top! Here are 6 easy ways to fund your project for less.

How you pay for the work to your home can make things much more affordable and help your budget stretch that bit further.

1. Spend your savings

The easiest way to pay for home improvements is to use any savings you have.

Using the money you’ve built up savings accounts will almost always be the cheapest way to pay (as opposed to loans or credit cards that charge interest).

Of course, your savings could be better spent elsewhere and you may have reservations about spending your safety net so you need to think carefully before you make a decision.

If you have other outstanding debts you should think about using your savings to pay off what you owe to avoid paying interest for months or years and look for a more cost-effective way to borrow to fund your home improvements.

2. Use a 0% purchase credit card

If you want to spread the cost of paying for double glazing or a new kitchen then a 0% credit card could be the next best option.

With a 0% purchase credit card you can spread the cost of a big buy over an extended period without paying extra in interest.

This is because the introductory 0% period can last for months or over a year in some cases, so you can split repayments up and only end up paying back the value of whatever it is you bought.

If you pay for a £2,000 bathroom on a 0% purchase credit card with an 18 month introductory period, you could split it up into 18 monthly payments of £111.11.

Plus if you pay by credit card you will get extra legal protection if something goes wrong thanks to Section 75 of the consumer credit act, read our guide: How Section 75 of the Consumer Credit Act Protects Your Credit Card for more details.

As useful as this 0% period is, when it ends you will start being charged interest on the outstanding balance, so keep a close eye on your finances and make sure you’re actively paying off what you borrowed. If you don’t you might find yourself paying back more than you bargained for.

Make the most of a 0% Money Transfer

If you need to pay for your home improvements in cash and spread the cost a 0% money transfer credit card could be a good choice.

They allow you to move cash straight into your current or savings account, so you can withdraw it in cash, and repay it without being charged hefty cash advance rates. 0% money transfer cards charge slightly higher transfer fees than balance transfer cards but they do give you more flexibility.

This could be especially useful if you need to pay for labour or builders as part of your home improvements and they only accept cash.

You can compare the leading 0% money transfer cards to find the best deal using our 0% money transfer comparison . Just remember to pay off what you’ve borrowed before the 0% ends or you’ll be charged interest.

Move to a 0% balance transfer credit card

If you don’t have time to apply and wait for a new credit card to arrive you can still spread the cost of your home improvements with a 0% balance transfer card.

To take advantage you would need to pay for your project on an existing credit card (preferably a cashback or rewards credit card so you earn something back) and then shift the remaining balance to a 0% balance transfer credit card to avoid paying interest.

The interest-free period on balance transfers is usually longer than it is for purchases giving you more time to repay but you should find the card that charges you the lowest fee for the number of months 0% you need to repay.

Find out more by reading our guide How to find the best balance transfer credit cards.

3. Go for a personal loan

If you’re looking to borrow a fixed amount with set monthly repayments a personal loan could be the best choice. It’s possible to borrow anything up to £25,000 (depending on your circumstances).

Plus, as interest rates are fixed, you will know how much you need to repay and how long it will take, helping you work this into your budget. Borrowing the lowest amount over the shortest term will give you access to funds while minimising the cost.

The interest rates on personal loans can vary substantially, depending on how much you borrow, how long you choose to pay it off and your personal circumstances. When you start the search for a loan, lenders must show the representative APR. However, this is only an example of the rate you could get and only has to be offered to 51% of all applicants.

To find the cheapest option use a pre-application quote if available to find the best rate.

The drawback of taking an unsecured loan is that you have less flexibility to pay off the balance early or to vary your payments from one month to the next. You’re also likely to pay more in interest than with a 0% credit card, but if you’re looking to borrow a larger amount over a longer term it could be the more feasible option.

4. Investigate peer-to-peer lending

P2P lending sites work by matching borrowers with small businesses or individuals who are willing to lend money. In other words, you don’t borrow from a bank or large loan company.

You can benefit by getting a loan you can use to fund home improvements, while the lender makes money in the form of interest (i.e. the interest you’re paying on the loan).

Why consider a P2P loan?

Peer-to-peer loans can sometimes offer better rates than those offered by banks, meaning you can still get the money you need to fund home improvements without paying back as much in interest.

This doesn’t mean they’re necessarily always easier to get than bank loans, or even cheaper, but they’re worth considering.

Compare peer-to-peer lenders to see whether they can offer you better loan conditions than the banks. Read our guide Social Lending – Is It Worth the Risk? to find out more.

5. Consider secured homeowner loans

If you’re a homeowner and you’re undertaking some serious renovations a secured loan could be an option worth investigating.

Secured loans are offered if you can put your property up as collateral, which provides security for loan companies – meaning they’re willing to make more money available because they can, in a worst case scenario, take back your home if you can’t repay. See Should You Borrow Against Your Home for more.

While you should only apply for a secured loan payment if you’re confident you can repay the loan (and interest), the amount of money you can ask for is often far more than you can get from unsecured loan companies. If you want to borrow more than £25,000 a secured loan could well be your only option.

However, if you can’t pay back the loan your home may be at risk, so make sure you only borrow what you can afford to and make repayments on time or you might lose your property.

To find the best secured loans it’s a good idea to compare what companies are offering and rule out ones that don’t meet your needs, in terms of the secured loan amount, interest rates and repayment conditions.

Use our secured loan quote form to find out what you could borrow.

6. Council advice and home improvement loans

Some councils have dedicated home improvement departments to provide financial help to those who need it.

The help you can get to carry out home improvements will depend on the service your council offers, your circumstances and your house’s condition.

If you qualify for financial help you may be given money to help you make urgent repairs or adaptations to your home. This could take the form of a grant (that you don’t have to repay) or home improvement grants for low incomes (which you may have to pay back).

If you don’t qualify for financial assistance in the form of loans or home improvement grants, you may be offered advice about maintenance and how to prevent further damage from taking its toll on your property.

Adapting your home for disabled people?

Councils often offer grants to help disabled homeowners make improvements, which may include helping to pay for the installation of stair lifts, ramps and ground floor bathrooms.

These home improvements can be extended to people who have difficulty moving around their house, either due to impairments or old age.

Council housing and rented property improvements

If you live in a home that you rent or don’t own outright, be it a private tenancy or council housing, you should seek permission before making any improvements.

If you’re a private tenant and need changes to be made to your home, you’ll need your landlord to agree before you start or your local authority can help, although, if you’re disabled your landlord should not refuse you without good reason.

If you live in a council house and are a secure tenant you can make changes and improvements to the property, but to be on the safe side you should still contact your council first, as for certain types of work you’ll need permission.

Plan for future projects

If you plan to undertake further improvements to your home in the coming years planning for the cost in advance could help make the work more affordable and mean you can avoid costly borrowing when you come to start the work.

Think about how much the work might cost and when you want to start to get a rough idea of how much you need to save each month to meet the requirements.

Regular savings accounts are ideal to build your savings over time and they can offer more attractive rates than instant access accounts, you can compare the top accounts using our Regular Savings comparison.