How to Finance Home Improvements

If you’re dreaming of a new kitchen, an extra bedroom, or simply modernising your home, financing home improvements can be a significant consideration. Home improvements not only enhance your living space but can also increase the value of your property. In this article, we’ll explore various ways to secure the funds needed to turn your renovation dreams into reality.

Mature contractor and female homeowner signing a contract indoors for a home renovation project. They demonstrate professionalism and dedication to their work, ensuring a successful remodeling experience.


The most straightforward way to finance home improvements is by using your savings. If you’ve been putting money aside, this can be a cost-effective method as it avoids the need to take on additional debt. Using savings means you won’t have to worry about interest rates or repayments, making it a stress-free option. However, ensure that you don’t deplete your emergency fund, as it’s important to have some money set aside for unforeseen circumstances.


Remortgaging your home is a popular method to fund home improvements. This involves replacing your existing mortgage with a new one, potentially at a lower interest rate, and borrowing more money against your property. By doing so, you can spread the cost of your home improvements over the term of your mortgage, making the monthly repayments more manageable. It’s crucial to consider the fees associated with remortgaging and to compare different offers to find the best deal.

Home Improvement Loans

Taking out a personal loan is another option for financing home improvements. Home improvement loans are specifically designed for this purpose and can be a suitable choice if you need a substantial amount of money. These loans typically have fixed interest rates and set repayment terms, which can make budgeting easier. However, it’s important to shop around for the best interest rates and to consider the impact of monthly repayments on your finances.

Credit Cards

For smaller projects, using a credit card might be a viable option. Some credit cards offer 0% interest on purchases for a certain period, which can be advantageous if you’re confident you can repay the amount within the interest-free period. However, be cautious of high-interest rates once the introductory period ends and ensure you can manage the repayments to avoid accumulating debt.

Government Grants and Schemes

In the UK, there are various government grants and schemes available to help fund home improvements. These can be particularly useful if you’re on a low income or need to make essential repairs.

Local councils often provide grants for home improvements, especially for elderly or disabled residents. For example, Disabled Facilities Grants can help fund adaptations like installing ramps or widening doorways. Additionally, Home Repair Assistance Grants can be available for urgent repairs to ensure the home remains safe and habitable.

Energy efficiency improvements can also be funded through schemes like the Energy Company Obligation (ECO) which provides grants for insulation, heating and other measures to reduce energy consumption. Always check with your local council or government websites for the latest available grants and eligibility criteria.

Equity Release

Equity release allows homeowners over the age of 55 to access the equity tied up in their property without the need to move. This can be done through a lifetime mortgage or a home reversion plan. While this option can provide a substantial amount of money for home improvements, it’s important to consider the long-term implications, including the reduction in the value of your estate and potential impact on inheritance.

Borrowing from Family or Friends

If you have supportive family or friends, borrowing money from them might be an option. This can be a flexible and cost-effective way to finance home improvements, often with little or no interest. However, it’s essential to have clear agreements in place to avoid misunderstandings and to ensure that both parties are comfortable with the arrangement.

Utilising Homeowner Loans

Homeowner loans, also known as secured loans, allow you to borrow against the equity in your home. These loans tend to offer lower interest rates compared to unsecured loans because the lender has the security of your property. However, it’s important to be aware that failure to repay the loan could put your home at risk, so careful consideration and financial planning are essential.

Budgeting and Planning

Proper budgeting and planning are crucial when financing home improvements. Start by obtaining detailed quotes for the work you plan to carry out, and ensure you include a contingency fund for unexpected expenses. By carefully planning your budget, you can determine how much money you need to borrow and avoid overspending.

There are various ways to finance home improvements, each with its advantages and considerations. Whether you opt to use your savings, remortgage, take out a loan or explore government schemes, it’s essential to choose the option that best fits your financial situation and long-term goals. Proper research and planning can help ensure that your home improvement project is a success without causing undue financial strain.