Normally held in April, the National Home Improvement Month in 2020 has been postponed until September. The campaign is no less significant for that slight delay. In 2019, it prompted at least 17 million homeowners to improve their homes in some way and 2020 is expected to see even more of them follow suit, say the organisers.

The organisers point to surveys that show the most favoured parts of the home for improvement – with some variation between all respondents and those in the younger, under-25 year-old age group:

  • kitchen – 20% of all respondents, but 18% in the younger age group;
  • bedroom – 18% of all respondents, but 25% amongst those under 25; and
  • living room – 14% of all respondents, but the bathroom for 10% of under-25s.

In truth, of course, and depending on the house you live in, you will have your own list of priorities when it comes to home improvements.

Apart from those priorities, one of your major concerns is likely to be how you are going to pay for the works themselves. Have you considered a remortgage for home improvements, for example? Let’s briefly run through some of your options:

Savings

  • if you have any savings, of course, you might decide to break into them and fund your home improvements that way – at least you avoid having to borrow;
  • on second thoughts, though, you might look at the relatively cheap cost of borrowing right now – following the reduction in the Bank of England base rate to 0.1% in March 2020 – and decide that borrowed money would avoid disturbing the savings it had taken you so long to build up;

Credit card

  • it’s so easy and convenient, it might hardly seem like borrowing – but purchases on your credit card, of course, come at a high price and a blistering rate of interest;
  • even if you are using your credit card only for buying some of the home improvement materials you need, remember that once you’ve reached your card’s spending limit, you can’t use it for other purchases;

Personal loan

  • the interest rate is certainly likely to be more favourable (compared to using a credit card) if you manage to arrange a personal loan with your bank or building society;
  • this may help to spread out the cost of your home improvements over five to six years or so, but since the loan is unsecured, you may still find the interest rate you are offered higher than you would like;

Second mortgage

  • if you offer security against a loan the lender’s extra confidence and reassurance is likely to reward you with a significantly more competitive rate of interest;
  • even though your home may already be mortgaged, you might want to consider a further mortgage – a second charge – on the property to raise the necessary fund against the equity you own;
  • this represents a second charge on your home, of course, so increases the risk of the property being repossessed if you default on repayments on either the principal (first) or second mortgage;
  • if you are only just meeting the monthly instalments on your present mortgage, therefore, you might want to avoid taking on yet another such loan;

Remortgage

  • if you enjoy a low rate of interest on your principal mortgage and can remortgage at a similar – or even more attractive – rate, then it clearly makes little sense to take on a second mortgage at a higher rate of interest;
  • if your current mortgage has a high or punitive early repayment charge you will need to offset this against the cost involved in remortgaging – and the comparison might nudge you in the direction of a second charge, depending on the rates you are offered;
  • if your credit rating has been adversely affected since you arranged the principal mortgage on your home, you again need to make a careful comparison between the relative advantages and disadvantages in remortgaging or seeking a new second mortgage for someone with your particular credit history.

If you are looking to improve your home, therefore, there are a number of option when it comes to financing the project. If you are borrowing the money, of course, you are likely to get the most competitive rate of interest by securing any loan against your property – but must remember that it remains at risk if you default on the repayments. If you choose to borrow against your home, you need to carefully compare the relative advantages of arranging a second mortgage or remortgage.

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