How to pay for DIY home improvements

Got some DIY planned for the Easter break? These are the best ways to pay for it.

Huge numbers of us will be spending our Easter break doing DIY.

Nationwide claims 45% of us will spend the long weekend tackling DIY jobs, and that means everything from a splash of paint on the walls to more strenuous renovations like replacing the bathroom, kitchen or landscaping the garden.

And the amount we borrow to pay for our home improvement projects is going up. Over the past five years Nationwide say the average amount we borrow has gone up 21% from £7,932 to £9,570. 

But with those big projects that you can’t fund from savings, a personal loan isn’t always your best bet. 

DIY finance deals

Lots of DIY stores offer their own finance packages which can save you money against a personal loan from the high street.

Here’s what you’ll pay if you borrow with some of the big DIY stores.

*Wickes was unable to provide us with any further details of its finance package.

Free cash for a year  

Homebase and Ikea both offer interest free deals.   The Homebase deal is available for a year when spending £1,000 or more and really intended for those buying kitchens, bathrooms and bedrooms. But Home Retail, the company behind Homebase say there’s nothing to stop customers knocking up a £1,000 plus bill in store, with a trolley full of paint, home and garden items, and asking for the 0% deal.

Clear the balance within a year and you won’t pay a penny in interest although there is a £29 admin fee.  But watch out; if you don’t repay in time, a whopping 29.9% interest rate kicks in. 

Ikea’s interest-free deal is restricted to kitchen purchases only and needs a £10 deposit.   

By comparison personal loan rates for borrowing £1,000 over a year, according to moneyfacts.co.uk, come in at 18.6% with Sainsbury’s Bank, (if you’re a Nectar card holder), or for one where you don’t have to be an existing customer or pay upfront arrangement fees there’s Santander which charges a fixed 18.9% APR.

Borrowing up to five years

If you’re borrowing for big spends and need a few years to pay the money back; Homebase and B&Q both have competitive 4.9% interest rates with borrowing up to a maximum five years. 

Wickes also has a 4.9% deal but was unable to provide any further detail about its finance package including minimum spend, terms or any deposit needed. When I rang round individual stores I was given options ranging from 0% deals over two years to minimum spends ranging from £0 - £2,0000.

Compare these rates with deals beyond the DIY store doors and if you’re borrowing £3,000 over three years without any loan arrangement fees, then the lowest fixed rates include Sainsbury’s Bank at 12.6%, Clydesdale at 17.9% and the AA at 18.9%.  

And even if you’re doing some serious renovations and want to borrow £7,500 over five years the DIY stores still come out top compared with some of the best loan rates on offer from Clydesdale charging 5.1%, Derbyshire also at 5.1% and Sainsbury’s Bank at 5.2%.

Small spends

78% of us actually spend less than £1,000 on our Easter DIY projects according to Nationwide which means, in this instance you could be better off using your overdraft, (depending on your deal), or popping the bill on a credit card with a 0% deal for new purchases.

Overdrafts

Check with your bank as some offer fee-free overdrafts.  If you’re with First Direct you get an automatic fee free ‘buffer zone’ of £250 (and £100 for new switchers), while switching to a Halifax Current, Reward or Ultimate account means you pocket £50 and can bag a fee-free overdraft for up to six months, although any overdraft limit depends on your credit rating. 

As with any short term ‘free’ overdraft deals, it’s worth making sure you’re close to payday or won’t stray beyond your limit as this is when big charges can kick in. With a Halifax Current or Reward account ‘unauthorised’ borrowing can mean knocking up £5 a day in penalties.

Credit cards

Paying by credit card can means two months’ worth of interest free credit if you time your purchase carefully, but if you need longer go for a card with a 0% deal on new purchases. 

Some of the longest deals on the market include Halifax’s Purchase Credit Card with up to 17 months interest free and Tesco Bank’s Clubcard Credit Card for 16 months. 

Both revert to rates of 16.9% beyond the introductory interest-free period, so if you can’t clear the balance at this point, you may need to get a 0% balance transfer credit card and switch the debt.

One other big benefit of using your credit card for payment is that if goods don’t arrive or the company you buy from goes bust, you can claim your money back  under the Consumer Credit Act; providing what you buy costs over £100.  

More on home improvements:

How I saved thousands on my home extension

Home extensions increase property value by up to 23%

How to make a rented house a home

10 tips to avoid cowboy builders

How to get planning permission

The ten biggest DIY mistakes