How to pay for home improvements - Video script

Home improvements don't usually come cheap, but find out the best ways to pay for them.

In an ideal world it’s best to pay for home improvements using your carefully squirreled savings. Back in reality, you may need some financial help, so what’s the best way to borrow?

Small improvements

If you’re a dab hand with a paint brush or great at hanging wallpaper you may be able to DIY and pay for nothing more than your materials.

For improvements which cost up to £2,000, try switching to a current account with an interest-free overdraft. The Alliance & Leicester Premier and Premier Direct accounts are good choices here with 0% facilities that last for a year.

Alternatively, try a 0% on purchases credit card with interest-free credit for a year on your spending. There are several cards which offer this deal including Sainsbury’s Finance Nectar card credit card and Tesco Clubcard Credit card.

Bigger improvements

If you’re having more work done to your home, a year might not be long enough to clear your debt, so think about applying for a personal loan. The cheapest loans charge under 8%, and usually offer fixed repayments for a set term.

Even bigger improvements

You won’t usually be able to borrow more than £25,000 using a personal loan. But a major overhaul of your home could cost more. If you need to pay for a big project, think about one of these three methods:

Secured loans

You could borrow enough for your project using a secured loan where the debt is secured on your home. But remember, if you fall behind with your repayments, your home could be at risk. Lenders’ appetite for secured loans has become subdued after the credit crunch, so it may not be easy to get funding in this way.

Further advance or remortgage

A better option may be a further advance or a remortgage. A further advance will allow homeowners to increase their current mortgage to raise capital. Meanwhile, remortgaging involves switching to a new deal and increasing your borrowing at the same time. Both methods will only work if you have enough equity in your home. And don’t forget, borrowing over the long term could mean paying a lot more interest.

Getting into debt may be the only way to fund home improvements, but think carefully about the costs before diving in.