Paying for a home makeover with a loan

Making over your home can cost a lot of money, especially if you plan to make major alterations. You could of course just save up the money, and if you are prepared to be patient, this approach offers by far the best value for money. However, if you don’t want to wait, then you are probably going to have to borrow the money from a private lender. There are three ways in which you can do this – with a personal loan, a homeowner loan, or a credit card.

If you are making smaller purchases that do not have to be paid for in cash, then a credit card may well be your best option. Many of them come with a low interest (or zero interest) introductory offer, so if you can pay off the debt before the end of this introductory period, you can get away with not having to pay any interest on the loan. Also, most credit cards offer additional purchase protection, which can be invaluable.

If you need to borrow a larger amount of money, the cheapest way to do it is by taking out a homeowner loan. Also known as secured loans, these require the borrower to put up an asset, usually their home, as collateral for the loan. The main risk with this type of loan is that if you do not keep up with repayments, the lender can repossess your home in order to recover the money they are due. However, if you have a patchy credit record, this may be the only option available to you.

If you are not prepared to take this risk, or if you are not in a position to put up your home as collateral, then you might want to take out a personal loan. Because these are a bit riskier from the lender’s point of view, the loan amounts tend to be smaller, and the interest rates tend to be higher. The lender will always check your credit record when you apply for this type of loan, so if you have a history of missed payments or defaults, you will most likely be offered a low loan amount with a high interest rate, if you are approved for the loan at all. For more information about credit cards and loans, go to the Santander website.