Our Pick Of The Best Home Improvement Loans
Planning on some home improvements? Whether it’s a new kitchen or bathroom, a loft conversion, or extension – it’s becoming an increasingly expensive business. And, while using savings to fund the cost is ideal, many homeowners simply don’t have enough cash put aside. This is where a home improvement loan can help.
Our top loans for home improvement
If you’re seeking a loan to fund home improvements, there are two main options available. If you’re looking to borrow more than £15,000, you could consider a secured loan. This is where you put up collateral – usually your home – as security. Interest rates can be particularly competitive on secured loans as lenders consider them to be less risky. However, your property could be repossessed if you default.
An unsecured loan is the other option. You don’t need to be a homeowner as no security is required. But the deals can be harder to qualify for.
We’ve rounded up the top rates we could find (November 2024) on unsecured loans of between £7,500 and £15,000. You can find more details in our methodology, below.
Annual percentage rates (APRs) are representative which means you could be offered higher depending on your circumstances and credit score. However, your application will be processed through an eligibility checker which means your credit score won’t be affected.
Best for lowest rate
Tesco Bank
Representative APR
6.1% (Clubcard holders)
6.5% without Clubcard
Early repayment penalties*
Yes
Borrowing term
1-5 years
Representative Example
If you borrow £10,000 over 60 months with monthly repayments of £193.02. Total amount repayable will be £11,581.20. Representative 6.1% APR, annual interest rate (fixed) 6.1% p.a. Credit available subject to status.
Representative APR
6.1% (Clubcard holders)
6.5% without Clubcard
Early repayment penalties*
Yes
Borrowing term
1-5 years
Representative Example
If you borrow £10,000 over 60 months with monthly repayments of £193.02. Total amount repayable will be £11,581.20. Representative 6.1% APR, annual interest rate (fixed) 6.1% p.a. Credit available subject to status.
Tesco is offering loans from £7,500 at 6.1% APR if you have a Tesco Clubcard. Non Clubcard holders will get a rate of 6.5%. You can borrow up to £35,000 with varying terms (up to 10 years). Loans of £7,500 can only be taken over a maximum five year term.
Borrowers can make overpayments, but full repayment is subject to early repayment charges.
Find out more: read our Tesco Bank loans review
- Competitive rates
- Can make overpayments
- Two month payment holiday option at the start
- ERCs apply
- Higher rate if you don’t have a Clubcard
Best for longer repayment terms
M&S Bank
Representative APR
6.2%
Early repayment penalties*
Yes
Borrowing term
1-7 years
Representative Example
If you borrow £10,000 over 60 months with monthly repayments of £193.47. Total amount repayable will be £11,608.20. Representative 6.2% APR, annual interest rate (fixed) 6.2% p.a. Credit available subject to status.
Representative APR
6.2%
Early repayment penalties*
Yes
Borrowing term
1-7 years
Representative Example
If you borrow £10,000 over 60 months with monthly repayments of £193.47. Total amount repayable will be £11,608.20. Representative 6.2% APR, annual interest rate (fixed) 6.2% p.a. Credit available subject to status.
M&S Bank is offering a competitive rate on borrowing of £7,500 at 6.2%. Loans can be taken over one to seven years at this rate. You can borrow between £1,000 and £25,000, although rates will vary depending on the loan size and your credit score. Borrowers can overpay, but full early repayment will be liable to an early repayment penalty.
Find out more: read our M&S Bank loan review
- competitive rate
- borrow over 1-7 years
- make overpayments
- early repayment penalties
Best for payment holidays
TSB
Representative APR
6.2%
Early repayment penalties*
Yes
Borrowing term
1- 5 years
Representative Example
If you borrow £10,000 over 60 months with monthly repayments of £193.47 Total amount repayable will be £11,608.20 Representative 6.2% APR, annual interest rate (fixed) 6.2% p.a. Credit available subject to status.
Representative APR
6.2%
Early repayment penalties*
Yes
Borrowing term
1- 5 years
Representative Example
If you borrow £10,000 over 60 months with monthly repayments of £193.47 Total amount repayable will be £11,608.20 Representative 6.2% APR, annual interest rate (fixed) 6.2% p.a. Credit available subject to status.
TSB is offering a competitive rate on borrowing of £7,500 at 6.2%. Loans can be taken over one to five years at this rate (loans are available up to seven years – but at a higher APR). You can borrow between £1,000 and £25,000, although rates may vary depending on the loan size and your credit score.
TSB offers borrowers the opportunity to take two payment holidays (not back to back) in any 12 month period. This can give some breathing space if you have other demands on your cash in a particular month. But bear in mind interest will still be charged while you’re taking a loan repayment holiday, so this could extend the overall term of your loan and you may pay more interest in total.
- Competitive rates
- Payment holidays available
- Early repayment penalties
best for smaller loans
Santander
Representative APR
6.2%
Early repayment penalties*
Yes
Borrowing term
1-5 years
Representative Example
If you borrow £10,000 over 60 months with monthly repayments of £193.47. Total amount repayable will be £11,608.20. Representative 6.2% APR, annual interest rate (fixed) 6.2% p.a. Credit available subject to status.
Representative APR
6.2%
Early repayment penalties*
Yes
Borrowing term
1-5 years
Representative Example
If you borrow £10,000 over 60 months with monthly repayments of £193.47. Total amount repayable will be £11,608.20. Representative 6.2% APR, annual interest rate (fixed) 6.2% p.a. Credit available subject to status.
Santander is offering competitive rates for loans of this size. Loans are available over one to five years. You must be aged 21 or over, employed or self-employed and have a regular, annual income of at least £10,500 for loans up to £19,999, or an annual income of £20,000 or more for loans of between £20,000 and £25,000. You can make penalty free overpayments. But early repayment penalties apply on full early repayment.
For those looking for a smaller personal loan, Santander offers some of the lowest rates for small-sized loans under £7,500.
Find out more: read our Santander loans review
- Competitive rates
- Can make overpayments
- Early repayment penalties
- Minimum income requirements
What’s our methodology?
We focused on the cheapest representative APRs that apply across any borrowing amount within the range of £7,500 and £15,000.
However, there may be personal loans with cheaper rates on smaller sections of borrowing. For example from £15,001 to £20,000, or from £20,001 to £25,000.
None of the loans listed come with set-up fees.
All listed deals allow penalty-free overpayments but charge a penalty if you clear the loan in full ahead of the agreed term.
If you have less than 12 months remaining of your loan, providers can charge up to 28 days’ interest, while up to 58 days’ interest can be applied if there’s more than 12 months remaining.
What is a home improvement loan?
A home improvement loan (both most commonly, and for the purposes of this guide), refers to an unsecured personal loan which enables you to borrow a fixed amount of money that you repay over a fixed term at a fixed rate of interest. A home improvement loan is also an ‘unsecured’ loan because it is secured against an asset, such as your home.
With a secured loan, the lender has the right to repossess your property if you are unable to keep up with repayments.
You can typically borrow anywhere between £1,000 and £25,000 with an unsecured home improvement loan, although some providers offer loans of up to £40,000 or more in some circumstances.
You can choose to repay the loan over a term of between one and five years – but in some cases, longer.
What are the advantages?
Taking out a personal loan to fund work on your home comes with several advantages:
- interest rates are competitive, particularly for loan amounts of £7,500 or more
- monthly payments are fixed which can help with budgeting – you know how much to set aside
- you can decide the length of term over which you want to repay the loan
- you can usually borrow more than you can through a credit card or overdraft
- once you’ve been accepted for a loan, funds are can be paid as quickly as the same day
- you can usually make overpayments free of charge
- the work may add value to your home (although this is in no way guaranteed).
What are the disadvantages?
Here are the potential downsides:
- you’ll need an excellent credit score to be accepted for the lowest APRs
- monthly payments are not flexible so it’s essential you make payments on time and in full each month
- missed payments can have a negative effect on your credit score and make it harder for you to access borrowing in the future
- if you are able to pay off your home improvement loan early, you will probably incur an early repayment fee equivalent to one to two months’ interest
- if you’re carrying out extensive home renovations, borrowing limits may not be high enough.
What to consider before applying
If you’ve decided to apply for a home improvement loan, you’ll need to consider exactly how much you need to borrow and how much you can afford to pay back each month.
Keep in mind that if you choose a longer loan term, your monthly repayments will be lower, but you will pay more in interest overall.
When you apply for a loan through our comparison service, you will be entered into our Eligibility Checker. This provides an indication of how likely you are to be accepted for a loan and on what terms, without the need for making an official application.
The advantage of this approach is that it doesn’t show up on your credit score. This, in turn, means you can avoid the ‘multiple application trap’ which can result from being turned down. And a series of multiple credit applications can deter future lenders from giving you credit.
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