If you need more space in your property, a home extension might be a great solution. It will not only provide additional living space but it can boost the value of your home in case you’re willing to sell it later on. That being said, financing the project can be quite a challenge for many homeowners.
While at IGD Building, we can provide the materials, colours, and workmanship needed, we cannot give you the money it takes to transform your house. However, we might be able to offer a solution to your problem.
We are now an Introducer Appointed Representative of Ideal Sales Solutions Ltd, t/a Ideal4Finance. They offer home improvement loans and will help you finance your home renovation project.
Disclaimer: Please note that IGD Building is not the lender and this is for information purposes only. For further details on the available monthly payment options, please contact Ideal4Finance or click the image below to start your application process.
What is the Finance Application Process?
The finance application process with iDeal4Finance is quick and simple. Just click here and apply in just a few easy steps.
It will take you directly to our partner’s website where you need to fill in a few personal details like a valid mobile number, your name, your date of birth, and loan purpose.
You have to prepare proof of income and info about your physical address ahead of time so that when a member of the team gets in touch with you, you can provide all the details right away.
The company will contact you to verify your data and discuss your home improvement loan needs. You will get a personalised offer and if you like the loan term, you can take out a loan pretty soon. If you agree to the conditions, they will further advance your papers.
Do note that we are not the lender, meaning we don’t provide financing options. If you have any questions about iDeal4Finance, feel free to contact them to get further information about your home improvement loan.
How Do I Qualify for House and Loft Extension Loans?
If you want to borrow more money to finance a house extension, certain eligibility criteria apply. Most credit companies require that you:
- Are 18 years of age
- Have a UK bank account for direct debits to be taken
- Have 3 years of UK address history (be a permanent UK resident)
- Not be subject to bankruptcy
- Not be subject to a Debt Relief Order
- Have a regular income and regular employment
How Much Will I Need to Finance an Extension? How Much Does a House Extension Cost?
A house extension in Surrey varies in price depending on the location, size, and complexity of the job. Whereas a single-storey extension can cost around £1,500 and £2,500 per square metre, a bigger home extension might require up to £100,000.
Loft conversions run between £20,000 to £60,000, respectively.
Mind you that there may be additional costs such as architect fees, building regulations, planning permission, etc. Basement conversions and two-story extensions will be more expensive.
Benefits of a House Extension Loan
A house extension loan lets you get the space you need sooner than expected. It gives you the opportunity to spread the cost, which makes the cost more affordable. And since the monthly repayments are fixed, you’ll know how much you need to pay at all times.
This also helps you get the benefits of house extension such as increasing your property value and getting additional space. Eventually, it will improve your quality of life.
What Should I Consider Before Choosing a Home Renovation Loan?
There are different things to take into consideration before you sign a credit agreement for home improvement loans such as repayment terms, fees, and interest rate. Not to mention, you should shop around and compare prices of multiple lenders to ensure you are getting the best deal.
What Types of Loans are Available to Finance a House Extension?
There are a few types of loans on the market if you need money quickly. Here are some of the most common ways to borrow money for house extensions.
Unsecured personal loan
This is an unsecured loan, which means it doesn’t require collateral. It can be provided by an online lender, a credit union, or a bank. The interest rate ranges from 6% to 36%, making it one of the highest rates.
Needless to say, the terms you receive will depend on your credit score. If you have a good credit rating, you can get a smaller interest rate for your unsecured loans.
House extension secured loans
This loan is specifically designated for home extensions. It’s tied to a lower interest rate which is usually fixed. You can secure yourself one from a bank or another finance institution. The repayment terms are typically longer than with other types of loans.
Savings and credit cards
It goes without saying that if you have savings, you can use them for your home extension. It’s always a good idea to use your own funds instead of taking on debt. If you don’t have enough savings to cover the whole home improvement project, at least you will need a smaller secured loan.
That being said, you should consider having some money for emergencies. So in some cases, it may be best to keep your savings intact, since they can come in handy for other expenses later on. Remember that some of the better savings account deals might restrict you on how much you can borrow.
Now, for credit cards. If you have a high limit, you can definitely use your credit card to fund your extension project. Before proceed, research the interest rates and any fees that may be associated with the credit.
One of the benefits of sticking with this option is that you get some protection due to the Consumer Credit Act.
Loan for a loft conversion
If you are planning to extend your loft and turn it into a habitable space, a loft conversion loan can help you get the job done. There are some financial companies that offer special terms for homeowners who are looking to expand their attics. They may be secured or unsecured loans depending on the size of the job and other factors.
Second charge mortgages
These are secured loans borrowed against the equity in your home, while keeping your existing mortgage in place. This requires borrowing more money from a company other than your current mortgage lender.
You can obtain one from the bank or other financial companies. They typically have lower interest rates and longer repayment terms.
Mind you that mortgage rates can rise over time. Also, your existing mortgage lenders have priority over the second mortgage lender if you decide to sell your property.
Please note that this is not the same as remortgaging or using a further advance.
Home equity loans
Home equity loans require the borrower to use their property as collateral. They are secured loans, so to say. You need to have sufficient equity for this one. The amount of the loan is calculated by the value of your home, which is in turn assessed by an appraiser from the credit company.
This is a secured loan with very high interest rates. When it comes to a traditional home purchase, it is the buyer who borrows money from a credit company to pay the seller for the property.
With respect to a wraparound mortgage, the seller is still paying off their original loan which they used to buy the property but extend financing to the buyer. The buyer thus sends monthly payments to the seller with a much higher interest rate, which allows the buyer to earn a small profit from this.
Bridging loans for short-term lending only
This is a short-term loan that enables you to raise funds to cover the gap between selling your existing property and purchasing a new one. In many cases, you go for a bridging loan to cover the full cost of your home extension project, especially if your intention is to sell it after the project is finished.
One thing to keep in mind is that bridging loans comes with high interest rates, a broker fee and a lender fee. In general, you want to leave this option for last.
Can you Remortgage to Pay for a Property Extension?
Absolutely. You can pay for your extension by remortgaging your home. What this involves is taking another mortgage in addition to your existing one. It should be bigger so you can use it to pay off your building project to your current lender.
Do not forget that a remortgage involves early repayment charges, valuation fees, and legal fees. It’s not something to take lightly.
It’s important to compare loans before you settle on a home extension loan provider. This way, you can find the best deal and negotiate the terms and conditions so they are in your favour. Keep in mind that there may be some arrangement fees and watch out for hidden fees.
How Much Can I Borrow for a Home Extension?
The amount of your home improvement loan will depend on a slew of factors like your income, good credit score, and your lender. When it comes to personal loans, you can borrow anywhere from £1,000 to £25,000. With respect to secured loans that require some kind of collateral, the amount can span £500,000 or more.
What type of loan is best for home improvements?
There is no straightforward answer to this question. The best type of loan will vary based on your personal circumstances and financial situation.
A lot of finance options can be used including but not restricted to an unsecured personal loan, secured personal loan, and credit cards. With that said, you have to consider the repayment terms, interest rates, and eligibility criteria.
What is the difference between a home equity loan and a home improvement loan?
A home improvement loan is a type of personal loan that is mostly unsecured, whereas a home equity loan is a secured loan that uses your home as equity. The latter provides lower interest rates but you risk losing your property if you don’t pay your debt on time.
Am I eligible for house extension finance?
If you want to know whether you are eligible for a loan for house extension, you should contact a credit provider and ask for a quote. The main criteria are your financial circumstances and credit score.
If you have a good credit record, it will be easier to obtain a loan. But keep in mind that every company has unique requirements.
Do I need to tell my mortgage company if I build an extension?
Yes, definitely. If you plan to build an extension or engage in further home improvements, you have to inform the mortgage company of your decision. The reason is that your current mortgage may have to be recalculated since the value of your home will increase.
Will you need planning permission for your extension?
It depends on the size and type of extension. Many extensions will need a planning permit, while small alterations will not.
You need to check with your local authority to ensure that you comply with the building regulations applicable to area.
What is an early repayment charge?
This is a fee that the borrower is charged when they give the existing lender a bigger lump of money than their monthly payments should be or when they pay off the full loan amount before the repayment period is over.
Keep in mind that some lenders allow you to pay your loan early on without charging you any fees.