Funding Home Renovations: What Are The Options? 

If you have been dreaming about your home improvement plans, you should consider your options before deciding how to finance them.

Choosing the wrong way to fund home renovations could be an expensive mistake! Here, we’ll run you through the options.

Using Your Savings

Using your own cash that you have saved up is probably the easiest way to fund your home improvements.

Set up a deliberate savings pot and establish a budget for your renovations. This is something that many business founders do in order to start their business and get it off the ground in the early stages (source: Connectd). However, this option is not risk-free, as should the venture not work out or the home renovations not add value to your property, you may be left significantly out of pocket.


Using cash allows you to get on with your home improvements at your own pace without waiting for funds to come through. Perhaps the most significant benefit is that you’ll incur no interest, fees, or charges and have no loan to pay back.

However, you may realise that financing your home renovation will drain all your savings. If you don’t have enough saved to fund your project, don’t worry. There are still plenty of other funding options.

Use a Credit Card  

If your project does not require as much money, applying for a credit card could be a good choice. Most banks offer credit cards that you pay off at the end of each month.


Supporting your plan through a credit card is generally cheaper than getting a loan, and the money is available quickly. Some lenders even give interest-free credit cards. Credit cards sometimes offer rewards to their customer, such as money back bonuses or airline miles.


You will need to have a good credit history and credit score to get a credit card. Using a credit card also runs the risk of spending more than you can afford. Make sure to pay your debt on time, or you might incur high-interest fees and late payment charges. Additionally, most credit cards come with an additional annual cost.

Use an Unsecured Loan 

Unsecured loans are a preferred way of financing home improvements. These loans are not tied to a piece of collateral, so lenders can’t claim your assets if you default. It is therefore the case that unsecured loans like payday and instalment loans will have higher interest rates and APR attached to them than secure equivalents (source: Kallyss). Therefore, it is always advised to seek alternatives before pursuing unsecured loans for renovations.


You can get a secured loan quickly, and you won’t put your home or possessions at risk.


Lenders will only grant you an unsecured loan if you have an excellent credit history and steady income. You can borrow less with an unsecured loan than with secured credit, usually up to £50,000. They also tend to come with higher interest rates and lack flexibility. Typically, you can’t renegotiate your payments or pay in advance without being fined.

Get a Secured Loan 

Secured loans are collateral loans, meaning they are taken out against something you own. This is usually your car or home.


Secured loans tend to be quite flexible and have lower interest rates. They are also easier to access by homeowners who don’t have a perfect credit score. Moreover, you can access a higher sum, up to £100,000 in most cases, for longer periods. You can usually renegotiate the terms of your loan or pay debt early without receiving a fine. And, repaying your secured loan on time can improve your credit score!


Don’t forget that secured loans put your assets at risk. Also, getting the loan could take longer as lenders typically evaluate your collateral before approving.

Remortgaging for Home Improvements  

If you are working on a large-scale renovation or building an extension, you may consider remortgaging to finance it.


Your home’s equity can help you borrow more money, and you may be able to secure a better interest rate. It can also be simpler to combine all your debts into a single monthly payment.


Unfortunately, lenders may be hesitant to accept your application. There may also be some fees to get a remortgage and early repayments fees. Remortgaging can significantly lengthen your mortgage timeframe. And the most considerable risk of all, your home can be repossessed if you don’t pay on time.