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Whether it is to buy a new dream kitchen or bathroom or maybe to have
a conservatory or garage built any major home improvements
will add to the its value. But they don't come cheap. One way of paying
for these improvements is to take out a Home Improvement Loan.
They can be for virtually anything related to the home from as little
as redecorating a room to building a 2-storey extension.
In general there are two types of Home
Improvement Loan that you will want to consider.
A secured loan
This is where your house (if you own it
outright or are paying a mortgage on it) and an unsecured
loan. With a secured home improvement loan
you will (usually) get a lower rate of interest It will also be easier
to get, if you have or have had bad credit problems. The reason is that
lender is taking less risk. If you don't keep up the payments on the loan
they could sell off your house to pay your debts.
An unsecured loan
This is where there are no securities
on the loan, in general they could credit blacklist you if you miss payments(so
you would have take a secured loan next time!?)
or send the boys round. However I doubt the Halifax or Nationwide would
do the latter. However in some cases they can chase you through the claims
court, and actually end up repossessing your house anyway, to get the
loan repaid!
Best Loan for you
How do you know which home
improvement loan is the best for you? Although the actual
deal that you get with a lender will depend upon your circumstances (credit
history, salary, age, joint or single application, collateral, amount
to be borrowed and length of payback period) a good guide is the typical
APR (Annual Percentage Rate) that the lender
quotes. It may be the case that a lender that has some minor celebrity
holding cash in their hands in a two page adverting spread in the Sunday
magazine hasn't got the best rate - although you do get a free watch!
Go to your local bank and building society branches and get details of
there best rates. Another option is to search Google for "Home
Improvement Loan comparison" to find sites that automatically
list the best deals of the day. Your lender should tell you what the total
cost of repayment of the Home Improvement Loan
would be. In this way any additional 'hidden' charges can be seen when
comparing lender deals.
Once you've found the best deals you can
apply in writing, by telephone, got to the branch or via the Internet.
Whether your application is successful or not will be judged on
- Salary
- Outgoings - credit card arrears, mortgage payments, etc
- Credit History
If you find that you have been rejected because of a poor credit rating
then you can get details of your history by contacting either Equifax or Experian. Both will charge
for this service.
After taking out a loan
After you have agreed to the loan and if it is less than £25000,
you have up to 7 days to cancel it with no obligation under the 1974 Consumer
Credit Act. After this period you can protect yourself if your circumstances
change by taking out some form of payment protection plan.
In the event of you losing your job this will come into effect and pay
your repayments for a set period of time depending upon the policy. These
can be taken out with the lender or via a separate company. If you haven't
taken one of these out and you do find that the repayments are becoming
difficult then discuss it with the lender at the earliest possible opportunity.
In conclusion for a Home Improvement Loan
- It can be taken out for many home improvements.
- A secured loan will make your monthly repayments
lower.
- BUT your home is at risk if you don't keep
up the repayments.
- Look on the net, the newspaper and local branches for the best deal.
- Be honest in your application - can you afford it?
- Any difficulties contact the lender ASAP.
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