Home Improvement VS Home Equity Loans

If you are looking to finance a home improvement by borrowing the money, you may say, "a loan, is a loan".

You would however be wrong in making that assumption.

There are different kinds of loans, and each has its own lending guidelines and may be tailored to a specific purpose.

Not to confuse someone, but a home improvement loan is to make improvements to a property, a home equity loan can be to make improvements to a property, or for other purposes.

Home equity loans are loans against the equity someone may have in their property; against the value of their property.

These loans are usually secured by the property, such as in a second mortgage.

Some banks offer a line-of-credit that is secured by the equity in a property. The homeowner may have £25,000 of equity in their property, and be approved for a £10,000 line-of-credit. Which means they can access part or all of this credit in order to do repairs, or for whatever reason they wish.


Yes

Reasons to consider a home equity loan:

  • Interest rates may be lower.
  • Longer term to repay the loan.
  • May be easier to qualify.
Not

Reasons to not consider a home equity loan:

  • The loan is secured by the property, failure to make payments could affect the house.
  • Terms can be long, like 10 years or longer. You may not want to be making payments that long.
  • You may not have sufficient equity in the property to qualify for the loan.

Reasons to consider a home improvement loan:

  • You can choose the terms that suit your borrowing needs.
  • The loan is not secured by the property.
  • No valuation of the property is required.

Reasons to not consider a home improvement loan:

  • Interest rates may be higher.
  • You may need a good credit score and good credit.

If you are in need of a home improvement loan, and do not have sufficient equity in the property, and may not be able to qualify for a personal loan through a bank, you may want to look into a Buddy Home Improvement Loan.

If you are in need of a home improvement loan, and do not have sufficient equity in the property, and may not be able to qualify for a personal loan through a bank, you may want to look into a Buddy Home Improvement Loan.


Benefits of a Buddy
Home Improvement Loan

  • Bad credit OK
  • Loan is not based on value of the property
  • A Buddy Home Improvement Loan is not secured by the property
  • Quick and easy online application
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Representative Example

Borrow
£3,250

Term
36 months

Repaying
£158.57 p/m

Total Repayable
£5,714.67

Interest Rate
41.16% (fixed)


Representative 49.9% APR.

Terms and Conditions apply. Suitable Guarantor required. All loans are subject to status and affordability checks prior to approval. All applicants must be 18 or over.

Minimum period for repayment: 12 months | Maximum period for repayment: 60 months | Minimum APR 49.8% | Maximum APR 49.9%
Representative example: Amount of credit £3,250 for 36 months. Interest (fixed at 41.16%): £2,464.57. Total amount payable of £5,714.67. Representative 49.9% APR (Variable). 36 repayments of: £158.57.