Secured Loan for Home Improvements

A secured loan for home improvements is borrowing secured against your property and used to pay for renovations, repairs or alterations.

It is normally arranged as a second charge mortgage. Your existing mortgage remains in place, while the secured loan is provided separately by a second charge lender.

You will therefore have two separate credit agreements secured against your property:

• Your existing mortgage
• Your secured home improvement loan

You will need to maintain the repayments on both agreements.

A secured loan could be used to pay for a single large project or several improvements completed at the same time. The amount available will depend on your income, expenditure, credit history, existing borrowing, property value and available equity.

The loan must be repaid over the agreed term, together with interest and any applicable fees.

The lender registers a legal charge against your property. This charge sits behind the legal charge held by your existing mortgage provider, which is why the borrowing is commonly called a second charge mortgage.

You do not normally need to move your existing mortgage to the new lender. Your original mortgage can remain on its current rate and terms, provided the secured loan lender and your existing mortgage provider’s requirements are satisfied.

The application process will normally involve:

1. Establishing how much you need for the improvements.
2. Reviewing your income, expenditure and credit commitments.
3. Assessing the equity available in your property.
4. Researching potentially suitable secured loan products.
5. Completing affordability and credit checks.
6. Valuing or assessing the property.
7. Receiving and considering a formal loan offer.
8. Completing the loan and releasing the funds.

You then make the agreed monthly repayment to the secured loan lender alongside your existing mortgage payment.

A secured loan could be used to fund many different types of property improvement, subject to the lender’s criteria.

Possible uses include:

• Building an extension
• Installing a new kitchen
• Replacing or renovating a bathroom
• Converting a loft
• Converting a garage
• Creating a home office
• Adding an additional bedroom
• Reconfiguring the internal layout
• Replacing windows and doors
• Repairing or replacing a roof
• Updating plumbing or electrical systems
• Installing a new boiler or central heating
• Improving insulation
• Installing solar panels
• Installing a heat pump
• Landscaping a garden
• Building a driveway
• Improving accessibility
• Repairing structural problems
• Undertaking a complete refurbishment

The lender may ask for details of the proposed work and how the money will be spent. For larger projects, it could request quotations, architectural drawings, planning permission or information about the contractors.

If the work is particularly extensive or will make the property temporarily uninhabitable, a standard secured loan may not be appropriate. Specialist renovation or development finance may need to be considered.

MortgageKey can help you explore the available options for funding your home improvements.

Our advisers can review:

• The amount you want to borrow
• Your proposed improvements
• Your income and expenditure
• Your existing credit commitments
• Your credit history
• Your property’s estimated value
• Your current mortgage balance
• The equity available in your property
• Your existing mortgage rate and charges
• The likely monthly and overall costs
• Alternative ways of raising the funds

Where a secured loan for home improvements is suitable, we can search for an appropriate product and explain its costs, risks and repayment conditions before you decide whether to proceed.

All lending is subject to status, affordability, eligibility and the lender’s criteria. The interest rate and terms available will depend on your individual circumstances.