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If you are looking for a renovation loan to restore your property to a good condition and make repairs, Proper Finance can help you get the best rates and terms to suit your requirements.
You can apply for £25,000 to £10 million repaid over 1 month to 24 months with flexible repayment options and bad credit taken into consideration.
At Proper Finance, we work with some of the best established renovation loan providers in the UK and we can offer you a free and no obligation indicative quote. Simply click on the ‘apply now’ button, where you’ll be asked to enter some basic details and after which receive an indicative quote.
What is a Renovation Loan?
A renovation loan offers short term finance to facilitate repairs and restoration of your property. It is used by property investors, landlords and developers who want to renovate the property with the ambition to attain an increased sale price or rental value. This is done by enhancing the value of the property through the renovations before letting or selling the property.
Renovation loans are available as first and second charge loans secured against the investment property.
- First Charge Renovation Loans – The loan will be borrowed to purchase a given property and refurbishments will be made.
- Second Charge Renovation Loans – A second charge renovation loan is an additional loan taken out against an existing property.
In both instances the property acts as collateral if the borrower fails to make repayments. Whether you get a first or second charge renovation loan will depend upon your situation. If you already have a loan that’s been taken out against your property, taking out an additional loan for renovations will become a second charge renovation loan.
What Can a Renovation Loan Be Used for?
Renovation loans are typically used to substantially changing the structure of the property. This can include:
- Altering the floor layout
- Converting room to new use
- Removing or replacing a sub-standard section of the property such as a chimney breast or walls
- Needing to meet new building regulations such as meeting disability access requirements or energy efficient requirements
- Restoring historic buildings in line with local authority requirements
Often a building is being renovated that has some historic meaning where the owner wants to keep the quirks of the property and wants or needs to restore it to its original state. Renovation projects are generally higher cost and take longer to complete.
Is a Renovation Loan a Good Idea?
Renovation loans can be a good idea if you’d like to make improvements to your property and are confident that you can afford the loan.
As we’ve explored, renovation loans can be used for a variety of different projects. They can be used when you’re wanting to make your property more attractive before getting it on the market.
The renovations made possible through a loan like this can help to increase the value of the property. However, if you fail to keep up with repayments on this type of secured loan, you could risk losing the property altogether.
While these types of loans can help borrowers to improve their properties in a range of fantastic ways, they’re only ever a good idea when you’re in the right circumstances, and know that you will be able to afford the repayments on the loan.
How Much Can I Borrow for Home Renovation?
You can borrow anywhere from £25,000 to £10 million. Typically you can borrow up to 75% of the property value.
Renovation loans are designed for short term purposes and are usually paid back when the project is complete. Loan duration tends to range from as little as one month up towards 24 months. Failing to service the loan payments could result in losing the property.
The rate you pay will be heavily linked to loan to value (LTV), so a larger deposit will mean lower rates. As well as the property value, other eligibility criteria will apply to the renovation loan you’re wanting to borrow.
What is the Eligibility Criteria?
Common requirements include:
- Based in the UK
- Equity in the property (usually 70% LTV preferred)
- The property must not be the borrowers primary residence
- A valuation of the property is required
- Estimated cost of works and exit strategy must be provided
The eligibility criteria for a renovation loan varies depending on the lending provider. Having a good credit score can also help to enhance your loan application, and help you access better rates. However, you may still be eligible for a renovation loan with bad credit, particularly as this is a secured type of borrowing.
Can I Get a Renovation Loan With Bad Credit?
Yes it is possible to obtain a renovation loan with bad credit. However, lenders may offer lower amounts to borrow for the renovation and charge higher rates to help them reduce their risk of the loan not being paid back.
Given the renovation loan is secured against the property, it reduces the risk to the lender. As long as the loan provider feels that you have the capacity to repay the loan, they will be willing to provide one for you.
Why Use Proper Finance for Renovation Loans?
Proper Finance is a free comparison site that can help people find the best renovation loans to meet their needs across the UK. We work with some of the best lenders throughout the UK, who are all regulated, meaning any loan you find through our site is safe and secure.
Working with over 100 fully FCA regulated and authorised lenders we are able to secure the best rates from award winning providers.
Our online application takes only a few minutes to complete, and once finished offers applicants an instant decision. No fees are incurred.
How to Apply for a Renovation Loan
If you’re looking to quickly get a renovation loan there are many banks and non-traditional lenders who can help. The process is easy and straightforward.
Simply use proper finance’s free comparison site, find the best loan option for you and apply online. The application rarely takes more than 5 minutes. In most cases it takes only a few days for the renovation loan to be approved, processed and credited into the borrower’s account once requirements are met.