- 04
- Jan
More people are borrowing secured loans for home improvements, but a rising number of households are financing home improvements with unsecured loans rather than with a homeowner loan or by borrowing from their savings.
Reports suggests that homeowners in the UK have spent one and a half thousand pounds each on hiring professionals to complete home improvements.
Experts from Moneyexpert have warned, however, that consumers should be careful that they are not paying too much because of the variations in interest rates amongst unsecured lenders. In some cases consumers pay 25 percent of the loan capital in interest.
The Chief Executive of Moneyexpert stated: “Personal loans can vary in price dramatically – you could end up paying back as much as a quarter of the amount you borrowed in extra repayments unless you research the market carefully.”
This amount becomes detrimental when the homeowner is completing the home improvements to prepare the home for sale, or to meet the recent regulations for rental properties.
Consumers who are borrowing a loan to finance home improvements should compare the options. Homeowner loan may not prove more cost effective method of financing home improvements. The interest may be lower, but the payments are extended over a longer period of time.
A secured loan is available over a shorter period and with low interest rates, helping to keep down the total paid in interest.
Moneyexpert feels that this is reversed, with homeowner loans offering the most cost effective method of borrowing a loan for home improvements. These differences of opinion are based on the wide variation between different homeowner loans, and different secured loan packages.
