What is a home improvement loan?

If you own your own home, it may be that you can take out a homeowner loan for any improvements, which is typically secured against your home.

You may also be able to take out an unsecured loan which is also known as a personal loan or payday loan and not secured against anything valuable that you own as security.

How does it work?

A home improvement loan could help you upgrade without you having to move to a new house or apartment. With a personal loan, the repayments are likely to be fixed and over a shorter period of months. With a homeowner loan, you may be able to borrow more, for longer, and quite possibly with lower interest rates. Hopefully, this will add value to your home in the process.

Home improvement loan pros and cons

What to consider (negative points/risks)

  • If opting for a personal loan, you may not be able to borrow as much, and the interest rates will likely be higher than with a homeowner loan.
  • APR rates can vary tremendously, and you’ll need to have a very good credit rating.
  • If you are accepted for a homeowner loan and miss repayments, you could end up having your home repossessed.


  • With the help of a homeowner or personal loan, you could be adding value to your property.
  • A secured loan can offer lower interest rates and repayment over a longer period of time, spreading the cost more affordably.
  • With either loan. You could generally borrow more than a credit card would allow.

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