
The Ultimate Guide to Financing: Home Renovations

This guide outlines financing options for home renovations, including personal loans, home improvement loans, credit cards, remortgaging, and Kandoo's services. It emphasizes budgeting and strategic planning to optimize investments.
The Ultimate Guide to Financing: Home Renovations
Home renovations are a great way to increase the value of your property, enhance its aesthetic appeal, and create a space that better suits your lifestyle. However, they can also be costly, and many homeowners find themselves needing financial assistance to turn their renovation dreams into reality. This comprehensive guide will walk you through everything you need to know about financing your home renovation project, including the various financing options available, tips for budgeting, and how Kandoo, a UK retail finance broker, can help you find the right solution.
Why Finance Your Home Renovation?
Whether you're upgrading your kitchen, adding a loft conversion, or giving your home a complete makeover, home renovations often come with a hefty price tag. Many homeowners do not have the cash readily available to cover these costs upfront. Financing your home renovation allows you to spread the cost over time, enabling you to complete your project without compromising on quality or settling for less than you envisioned.
Financing can also be a smart move if you're planning to increase the value of your property. In some cases, the value added to your home by the renovation can outweigh the cost of financing, making it a worthwhile investment.
Understanding the Costs Involved in Home Renovations
Before diving into financing options, it's essential to understand the costs involved in home renovations. The price of your renovation will depend on several factors, including:
- Size of the project: Larger projects, such as full home remodels or extensions, will naturally cost more than smaller renovations like a bathroom or kitchen upgrade.
- Materials: The quality and type of materials you choose will significantly affect the overall cost. Premium materials like marble countertops or hardwood floors will cost more than standard options.
- Labour: Hiring professionals such as architects, builders, and electricians will add to your costs. While it's tempting to cut corners, it's essential to hire qualified tradespeople to ensure the work is done correctly and safely.
- Unexpected expenses: Hidden problems, such as structural issues or outdated plumbing, can arise during renovations, so it's wise to set aside a contingency budget of around 10-15% of the total cost.
Financing Options for Home Renovations
There are several ways to finance your home renovation project, each with its own advantages and disadvantages. Let's explore the most common options available in the UK.
1. Personal Loans
A personal loan is one of the most straightforward ways to finance a home renovation. With a personal loan, you borrow a lump sum from a bank or financial institution and repay it in monthly instalments over an agreed term, typically ranging from one to five years.
Pros:
- Unsecured: Most personal loans are unsecured, meaning you don't have to put your home or other assets at risk.
- Fixed repayments: Personal loans often come with fixed interest rates, so your monthly repayments remain consistent, making it easier to budget.
- Quick approval: Personal loans are typically approved quickly, allowing you to start your renovation project sooner.
Cons:
- Higher interest rates: Since personal loans are unsecured, they usually come with higher interest rates compared to secured loans.
- Borrowing limits: Depending on your credit score and income, there may be limits on how much you can borrow, which may not be sufficient for larger renovation projects.
2. Home Improvement Loans
Home improvement loans are specifically designed for financing renovation projects. These loans can be either secured or unsecured, depending on the lender and the amount you wish to borrow.
Pros:
- Tailored for renovations: Home improvement loans are often more flexible and tailored to the needs of renovators, with longer repayment terms and larger borrowing limits.
- Potential for lower interest rates: Secured home improvement loans may offer lower interest rates since they are backed by the value of your property.
Cons:
- Risk of repossession: If you take out a secured home improvement loan, your home could be at risk if you fail to keep up with repayments.
3. Credit Cards
Using a credit card for smaller renovation projects can be a convenient option, especially if you can take advantage of 0% interest offers on purchases.
Pros:
- Flexibility: Credit cards allow you to make purchases as needed and pay off the balance over time.
- Rewards: Some credit cards offer cashback or reward points, which can be beneficial for larger purchases.
Cons:
- High interest rates: If you don't pay off the balance within the 0% interest period (if applicable), you could be hit with high interest rates.
- Limited borrowing capacity: Credit cards typically have lower credit limits, making them unsuitable for larger renovation projects.
4. Remortgaging
Remortgaging involves switching your current mortgage to a new deal, often with a higher loan amount, to free up equity that you can use to fund your home renovation.
Pros:
- Potentially lower interest rates: Mortgage interest rates tend to be lower than those of personal loans or credit cards, making remortgaging a cost-effective option.
- Spread over a longer period: Since mortgages typically have longer repayment terms, your monthly repayments may be more manageable.
Cons:
- Longer-term commitment: Remortgaging means you'll be repaying the additional amount over the term of your mortgage, which could be several years or even decades.
- Fees: Remortgaging often comes with fees, such as valuation fees and early repayment charges if you're leaving your current mortgage deal early.
5. Kandoo Retail Finance
Kandoo is a UK-based retail finance broker that helps homeowners find the best financing solutions for their renovation projects. Kandoo works with a panel of trusted lenders to provide tailored financing options, ensuring you get the right deal for your needs.
Pros:
- Wide range of lenders: Kandoo's extensive network of lenders increases your chances of finding a financing option that suits your circumstances.
- Flexible terms: Whether you're looking for a small loan for a minor renovation or a larger loan for a full home transformation, Kandoo can help you find a solution with flexible repayment terms.
- Fast approval: Kandoo’s online application process is quick and straightforward, allowing you to get approved and start your project sooner.
Cons:
- Broker fees: As with most brokers, there may be fees associated with using Kandoo's services, although these are typically transparent and disclosed upfront.
Tips for Budgeting Your Home Renovation
Financing your renovation is only one part of the equation; it's equally important to create a realistic budget and stick to it. Here are some tips for effective budgeting:
1. Get Multiple Quotes
Before committing to a contractor or tradesperson, obtain multiple quotes to ensure you're getting the best deal. Don't automatically go for the cheapest option—ensure that the quote includes all necessary work and materials and that the contractor is reputable.
2. Prioritise Your Needs
If your budget is tight, focus on the essential elements of your renovation first. Consider what will have the most significant impact on your home's value and functionality, and save less critical upgrades for later.
3. Plan for Contingencies
As mentioned earlier, unexpected expenses can arise during renovations. Always allocate an additional 10-15% of your budget for contingencies to avoid financial strain if issues arise.
4. Track Your Spending
Once your renovation is underway, keep a close eye on your spending to ensure you stay within budget. Regularly review invoices and receipts to track costs and avoid overspending.
How Kandoo Can Help You Finance Your Home Renovation
Kandoo simplifies the process of finding the right financing solution for your home renovation. By partnering with a panel of trusted lenders, Kandoo offers homeowners access to a wide range of loan products, ensuring you can find a deal that suits your specific needs and budget.
Kandoo's easy-to-use online platform allows you to compare loan options in minutes, providing transparent information on interest rates, repayment terms, and fees. Whether you're looking for a small loan to fund a kitchen update or a larger amount for an extension, Kandoo's lenders offer flexible terms to suit your circumstances.
Additionally, Kandoo's approval process is quick, meaning you won't have to wait long to get the funds you need to start your project. And because Kandoo works with multiple lenders, you increase your chances of finding a loan, even if you have less-than-perfect credit.
Conclusion
Financing your home renovation doesn't have to be a daunting process. By understanding the various financing options available and carefully planning your budget, you can turn your renovation dreams into reality without breaking the bank. Whether you choose a personal loan, home improvement loan, or remortgage, Kandoo can help you find the best financing solution for your needs.
Remember, the key to a successful renovation is careful planning, budgeting, and choosing the right financing option. With the right approach, you can create a beautiful, functional space that adds value to your home and enhances your lifestyle.
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