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How to pay for home improvements
Making your home a safe and comfortable place to live could be a sound investment.
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If you’ve got savings already, or your home improvements can wait until you do, the main benefit is that you won’t have monthly repayments and interest charges to worry about.
However borrowing could be another option if you:
- Can’t afford to wait – for instance, if your roof needs urgent attention.
- Want to keep savings as a buffer to cover future expenses.
- Would lose higher interest paid on savings, e.g. from an ISA.
- Can borrow at a low interest rate.
- Want extra protection on credit card purchases.
Of course, you could use a mixture of savings and credit to pay for your home improvements, helping you keep your borrowing and interest costs to a minimum.
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If you’re over the age of 55 and have been contributing to a pension, you may be able to access a tax-free lump sum from your fund, using that to fund home improvements. However, it’s important to consider the future impact of this, leaving you with less income when you are older.
You should speak to a fully qualified pensions adviser, regulated by the Financial Conduct Authority, before deciding whether taking funds from your pension is the right thing to do.
Government support
You might be eligible for support with certain home improvements, for example, to make your home more accessible for residents with a disability, or to boost energy efficiency and reduce carbon emissions.
Disabled facilities grants
If you have a disability, you could apply for government support to adapt your home to meet your needs, including upgrading your heating system, widening doorways, installing a stairlift and improving bathroom access.
Energy Companies Obligations (ECO) scheme
Aiming to reduce carbon emissions and fuel poverty in the UK, the ECO scheme in England, Scotland and Wales works with energy companies to improve the energy-efficiency of homes. From insulation and solar technology, to upgrading boilers and heating systems, the work could also be subsidised.
If you're planning to use credit
When you apply for credit, lenders contact their preferred credit reference agencies to check your credit record. This may highlight any potential risks associated with offering you credit, and can influence the interest rates and any amount of credit you’re offered.
All lending is subject to an assessment of your circumstances.
With any form of borrowing, fees and interest may apply. To limit these costs, you should only borrow what you can reasonably afford to repay, over the shortest possible term.
How much can you afford to spend?
It’ll help to list out all of the things you need to budget for, including any quotes you’ve been given by tradespeople, and any extras you’ll need to buy in order to finish your home improvements.
You can shop around or change specifications to keep your costs down, but what you don’t want are any surprise costs you’ll struggle to cover part way though, especially if you can’t pause works without making life more difficult. You won’t want to be without a kitchen or bathroom for too long.
Once you’ve figured out your budget, you can turn your attention to how you’re going to cover the cost of your home improvements.
Planning your home improvements
Whether it’s a simple paint job, essentials like a new boiler, or a larger renovation, below are some things to consider before starting any work on your home:
DIY
It can help to minimise costs if you do certain things yourself, such as painting or preparatory works, but unless you really know what you’re doing and are qualified, leave serious tasks like plumbing and electrics to the trained professionals.
Keep a contingency
If you’re undertaking serious renovations, it may help to have some extra money set aside, which you could dip into if the unexpected happens. You never know what nasties could be lurking behind plaster, under floors, or in your attic.
Trades
It’s worth booking tradespeople in advance, as they often have a waiting list – or at least the good ones do. Spend some time reading reviews and asking for local recommendations. It’s also worth getting several quotes for the work needed, and make sure you ask for a written list of what’s covered within that price, helping you to avoid unexpected extras.
Pay as you go
You may need to pay a deposit upfront, but otherwise it’s worth paying in instalments for bigger projects, or at the end of smaller jobs, giving you some power if the work isn’t completed to your satisfaction.
Set a clear budget
Figure out what you can reasonably afford to spend in advance, and stick to that as closely as you can. Once you’ve factored in structural work, any remaining funds may lead your choices on fixtures, surface finishes and accessories.
Communication is important
Keep the conversation going with on-site tradespeople, so you’re aware of any complications as they arise. It’s also worth voicing any concerns you have, giving tradespeople a fair chance to correct anything you’re not happy with.
Where next?
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