Secured loans popular for home improvements
Recent reports have suggested that many consumers in the UK are taking out secured loans in order to fund home improvements, enabling them to improve their quality of life whilst living in the property and enabling them to add value to the property at the same time.
With property prices in the UK having soared over recent years many homeowners have enjoyed huge levels of equity against which to secure a loan, enabling them to borrow large sums of cash and carry out a variety of home improvements.
According to a recent survey that was carried out by the AA nearly ninety billion pounds has been spent on converting spare space into living space, with one in five homeowners having carried out this type of improvement. Seventeen percent of those carrying out this type of work said that they needed additional room, but the remainder simply wanted to increase the size of the property in order to add additional value to the home.
The average cost per household for carrying out this type of home improvement was around £10,000.
One expert from Moneysupermarket stated: "It seems a large number of people are getting into debt to develop. No doubt, the thinking behind this is there will be a return on investment."
However, she also added that those thinking about taking out a secured loan should consider the rise in monthly repayments and should ensure that they can afford the repayments in order to avoid losing the home altogether as a result of defaulting on the loan.
The popularity of secured loans for a variety of purposes has soared along with house prices in the UK, as many homeowners have found themselves sitting on a tidy little nest egg of equity, against which they can enjoy increased borrowing power.
Tom Smith
14th June 2007
More Information:
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How have Britons financed the billion of pounds spent on home improvements this year? Mostly through personal loans, although other forms of payments have been used as well.
- For those with good credit, a mortgage in decent standing, and a relatively (depending on the bank's definition) sizeable difference between a home's worth and the balance of a mortgage, a home equity line of credit may be a good option for those needing a loan
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Since the mid-1980s, more and more UK banks have seen the benefits of offering products that are in some way tied to ‘green’ environmental issues.
