What is a home improvement loan?

A home improvement loan – usually an unsecured personal loan – lets you borrow a lump sum to pay for work on your property, from redecorating a single room to bigger upgrades like extensions or new windows. You agree to repay the loan plus interest in fixed monthly instalments over a set period, which helps you budget with confidence.

Unlike a remortgage, this type of loan is completely separate from your mortgage, so it’s often quicker to arrange and doesn’t affect your existing mortgage deal. It can be a practical way to spread the cost of home projects without dipping into savings or using a credit card.

You’ll usually have full control over how you spend the money. Lenders don’t usually require you to provide a detailed breakdown of your plans. If the work costs less than expected, you can use the remaining funds for something else or make an early repayment on your loan to save on interest.

How do home improvement loans work?

Getting a home improvement loan is often simple and fuss-free. These loans tend to be unsecured personal loans, which means you don’t need to put your home up as collateral.

You borrow a fixed amount of money and repay it through regular monthly instalments that include both the loan and interest. Everything’s agreed upfront – how much you’re borrowing, how long you’ll take to repay it, and the interest rate – so there are no surprises.

Home improvement loans cover a wide range of projects that can upgrade your home, inside or out. For example, you might use the money for:

  • A kitchen makeover or new bathroom.

  • A loft conversion.

  • An extension.

  • A new roof.

  • New furniture or flooring.

  • Landscape work or a new driveway.

During a personal loan application, you’ll be asked what the loan is for, and ‘home improvements’ is a standard option. Once approved, the money typically lands in your account quickly, potentially within hours or even minutes, ready to kickstart your project.

Are you eligible for a home improvement loan?

Before you apply, it’s worth checking that you meet the main requirements. Lenders will look at your age, income and credit history to make sure you can comfortably afford repayments.

Here’s an example of what one leading UK provider of home improvement loans requires:

  • You’re 18 or over and live in the UK.

  • You’re in paid employment or have a regular income.

  • You’re not a full-time student.

  • You haven’t had a credit application declined in the past month.

  • You don’t have a history of serious credit issues, such as bankruptcy or CCJs.

Even if your situation isn’t perfect, you may still have options: joint applications, alternative lenders, or smaller loan amounts can sometimes help. A stronger credit record and a stable income generally give you more choice and potentially access to better rates.

How much can I borrow with a home improvement loan?

How much you can borrow depends on whether you choose a secured or unsecured loan, your income, credit history, and the lender’s rules. Home improvement loans tend to be unsecured, so the maximum amounts are usually lower than for secured loans, where your property acts as collateral.

As an example of how much you can borrow, two of the main UK banks both offer unsecured home improvement loans from around £1,000 up to £25,000, or up to £50,000 if you’re an existing customer with a qualifying account.

When it comes to the repayment term, some lenders offer shorter terms with lower rates, while others might allow longer repayment periods for bigger loans. As an example, one leading provider gives a couple of options depending on the loan amount:

  • 1 to 5 years terms for loans of £15,000 or less.

  • 1 to 8 years terms for larger loans above £15,000.

Stretching the loan over a longer term reduces your monthly payments but increases the total interest you’ll pay. Shorter terms cost more per month but save money overall on interest.

What are the different types of home improvement loans?

If you’re planning some work on your home, there’s more than one way to borrow the money. Understanding the different types of home improvement loans can make it easier to choose the right one for your plans.

Personal loans

Personal loans are a popular choice for home improvements because they’re fairly simple. You borrow a set amount and pay it back in monthly instalments, without having to put your home or anything else on the line.

As your home isn’t part of the deal, lenders usually cap how much you can borrow – often somewhere up to £25,000 – and rates can be slightly higher. These loans are generally better suited to smaller projects, like refreshing a tired room, fitting new flooring, or upgrading a bathroom.

Secured loans

Secured loans work a bit differently. Here, the loan is linked to your home, which means lenders are usually willing to lend larger sums and may offer lower interest rates as a result. Examples of this option include arranging additional borrowing on an existing mortgage, remortgaging or getting a second charge mortgage.

That said, it’s a bigger commitment. If you fall behind on repayments, your home could be at risk, so this type of loan is usually considered for larger, more expensive projects, such as major renovations or extensions that will add value to your home. It’s important to be confident the repayments are affordable before going down this route.

What should I consider when choosing a home improvement loan?

Before you click ‘apply’, take a moment to think about what really matters for your situation. A few small choices now can make a big difference to how much your loan costs in the long run.

How much do you need?

It’s tempting to borrow a bit extra ‘just in case’, but remember that the more you borrow, the more you’ll pay in interest. Work out your project costs carefully and only borrow what you genuinely need. This will keep repayments lighter and your loan cheaper overall.

What about the interest rate?

Home improvement loans tend to be personal loans with a fixed interest rate, which keeps your monthly repayments predictable and easy to budget for. It’s worth comparing providers, though, because even small differences in rates can make a big difference to the total cost of your loan. Variable rates may also be available with some lenders, but these can rise or fall over time, so fixed rates are typically the safer bet for those seeking certainty.

How long should you borrow for?

A longer term means smaller monthly payments, which can make life easier in the short term. But you’ll pay more in interest overall. Aim for the shortest term you can afford and you’ll clear the loan faster and pay less interest – just make sure the monthly cost still fits comfortably in your budget.

Are there alternatives to a home improvement loan?

A home improvement loan isn’t the only way to pay for work on your property. Depending on the size of the project and your personal circumstances, one of the options below might be worth considering instead.

Credit cards

For smaller projects, a credit card could be worth considering. If you get a 0% purchase credit card then you won’t pay interest if you clear the balance before that period ends and keep up with the minimum monthly payments.

This approach is usually better suited to lower-cost improvements, such as decorating, or buying new furniture or materials, rather than major building work.

A second mortgage on your home

A second charge mortgage is a separate loan secured against your home, taken out alongside your existing mortgage. It can be an option if you don’t want to change your current mortgage deal.

Like any mortgage, there are extra costs to consider, such as valuation fees, arrangement fees and legal costs, which can add to the overall expense.

Remortgage

Remortgaging could allow you to release extra money for home improvements if you’ve built up equity in your property. This involves increasing the size of your mortgage, which means your monthly payments are likely to go up.

Mortgage rates are often lower than other types of borrowing, and you have the option to extend your term to make the monthly payments more affordable. But remember that this will increase the total amount of interest you pay over time, so weighing this up is key.

Equity release

Equity release could be an option if you’re a homeowner aged 55+ and want to access some of your home’s equity without having to make any monthly repayments.

The most common type is a lifetime mortgage, where the interest is usually left to roll up on your loan until the plan ends when your home is sold, typically when you pass away or move into long-term care. Interest payment options are also available. Equity release can affect the value of your estate and entitlement to some means-tested benefits, so it’s important to consider the long-term impact.

Loan guides

Answering your questions about home improvement loans

You might be interested in

Page updated on 15th December 2025, Reviewed by Richard Groom