Are Home Improvement Loans Worth It?

Are Home Improvement Loans Worth It?
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When deciding to carry out work to improve your home, sooner or later you have to consider the costs involved. Often that will then lead you to the question ‘are home improvement loans worth it?’.

The answer will depend on a number of factors, not least your own personal circumstances and the size and terms of the loan that’s required.

Please note, the information in this article doesn’t constitute financial advice. Before you make a decision, it’s advisable to seek advice from a professional financial advisor.

When Using Home Improvement Loans May Make Sense

Borrowing Money For Home Improvements

Although we cannot say with absolute certainty when it may be right to use a home improvement loan, there are a few circumstances where it’s more likely to be the correct thing to do:

  • Work is essential and no other way of funding is available to you
  • To increase the value of your property with the view of selling it for a higher price

For example, when you don’t have any savings but the improvements you want to make are essential works such as those related to subsidence or damp that will only get worse if not rectified.

In that situation, you may not have much choice but to take out a loan to pay for the work. Make sure you check your home insurance documents first though as it’s possible the work is covered under your policy.

Another situation where a home improvement loan may be worth it is when you want to carry out work to improve your home and increase its value by more than you borrow (including interest). Check with an estate agent first, but if you are sure the work will add value, then it may make sense to take out a loan to get the job done.

This is especially true if you are about to sell your property and so will be able to recover your expenditure and pay back your loan as soon as your property has been sold.

You can read our guide about the best ways to add value to a property. It’s written from the point of view of investment properties but is actually true for any type of home.

When NOT To Use Home Improvement Loans

However, there are more situations where it isn’t advised to use a loan to improve your home:

  • If you are in financial difficulties already
  • If you have savings you could use
  • If you are planning to sell your home and the improvements will cost more than they will add in value
  • If interest rates are very high

You should avoid getting loans to cover home improvement projects if you are already struggling financially, at least not without first discussing with a financial advisor to ensure you can afford the repayments.

If you have savings available, it’s usually best to make use of them rather than taking out a loan. After all, there’s little point in paying interest to borrow money that you don’t actually need.

If you are expecting to move home soon and the home improvements you want to carry out are unlikely to add more in value to your property than you have spent, it’s not usually a good idea to take out a loan. In fact, in this situation, it’s probably not worth carrying out the work at all!

Finally, if interest rates are sky-high, then it may not make financial sense to take out a home improvement loan. At least not yet, anyway, interest rates are forever going up and down, so sometimes it pays to wait for rates to fall.

So, Are Home Improvement Loans Worth It?

As we have said, it will depend entirely on your individual circumstances whether it’s a good idea to take out a loan for home improvements. And given the risks associated with borrowing money, it’s not a decision that should be taken lightly.

If you need help making the decision, please do consult with a professional financial advisor. None of the information above should be treated as financial advice.

You can find out more about what types of loans are available to you if you decide to take out a loan in this very helpful article from MoneySavingExperts.

Decided to go ahead with your home improvement project? Don’t forget to read our guide on how to hire a skip.


  • Paul James

    Paul James, is a marketing expert with a passion for property. As well as being a property investor, Paul has also worked within the marketing departments of some of the UK’s leading estate agents. Paul is the founder of Property Road.

    View all posts
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