Paying for your project
1) Get cashback
If you can afford to pay off your credit card balance in full each month, use a cashback credit card to make your purchases. That way you’ll earn money back for each £1 you spend! Just make sure you definitely pay off the balance in full each month otherwise you’ll be hit with a hefty interest rate which will far outweigh any cashback benefits.
And if you’re keen on earning cash back, why not use a cashback website such as Quidco and TopCashback if you’re making any purchases online? Every time you buy from a retailer via one of these sites, your purchase is tracked, and a commission is paid to the cashback website – that commission is then passed back to you.
Compare cashback credit cards with lovemoney.com
2) Pay no interest on your purchases
If you know you won’t be able to pay off your credit card bill in full each month, use a 0% new purchases credit card instead. That way, you’ll pay no interest on the purchases you make.
Just remember to either pay off the balance when the interest-free period runs out, or move it all over to a 0% balance transfers card.
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3) Find out if you’re eligible for Government funding
If you’re elderly or disabled, you may be able to get Government funding to help you with your home improvements. Alternatively, you may eligible for help with the costs of eco-friendly home improvements.
Check out websites such as DirectGov and the Energy Saving Trust to find out more about what is available.
4) Borrowing
If the improvements you’re carrying out are going to add significant value to your property, it can be worth borrowing the money to pay for them.
One option to consider is taking out a personal loan. The advantage of this is that the interest rates can be relatively low - around 8% or 9% - and crucially, the loan isn't secured against your home.
For larger jobs – say around £20,000 – you could take out a secured loan (also sometimes known as a second charge mortgage) which are available to homeowners, and are secured on your property. Just be warned that putting your home at risk when you take out one of these loans.
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Alternatively, you could remortgage or take out a further advance to raise the money to fund your home improvements, assuming you have sufficient equity in your property.
If you remortgage you usually change your mortgage to another deal (with the same lender or another), at the same time increasing your borrowing to release equity. With a further advance, your existing lender usually increases your mortgage allowing you to release equity, but your mortgage deal remains the same.
You can find out more in Three ways to pay for home improvements.
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