By Ann Francis CEO of Cambrian Savings and Loans

There’s something about this time of year that makes everyone think about home improvements.

Whether it’s extra time off work, thanks to multiple bank holidays coming up, or simply the benefit of sunshine that helps us to literally see our homes and gardens in a new light, spring is traditionally a time to start sprucing up the nest.

Whether it’s a redecorating, installing a new kitchen or a major extension, one thing is for sure about home improvement – costs can easily escalate, especially in the current climate. If you are working to a budget, set aside 10 or – better still – 20 per cent extra for the unforeseen.

The best way to finance any project is through saving. However, if the cost of the project is more than you have saved, then it pays to look carefully at the variety of financing options.

The two main types of loans are secured or unsecured. Secured typically means that the loan is tied to your home, for example a mortgage, and this is often (but not always) used to borrow larger sums of money of £10,000-plus.

Secured loans are a lower risk for lenders, as they are tied to your property, so they are normally cheaper than unsecured loans. However, great care is needed with secured loans as the loan provider can repossess your home if you do not keep up repayments and, of course, mortgage rates aren’t as low as they were a year ago.

The second option is unsecured finance, which can either be at the point of sale in the DIY Store, a personal loan from the credit union, bank or building society or even a credit card.

For small home improvements, a credit card giving zero per cent interest on balance transfers or new purchases is an option, although you must remember to repay the balance before the offer expires as the ‘standard’ rate is typically much higher than a personal loan.

Use an online loan calculator to find out the total amount that will be paid. It may be that you are financially better delaying the renovation and saving for a year to fund the project.

If you opt for a loan, it also pays to check the rate offered and whether there are any additional fees such as late charges or early repayment penalties. In addition, check whether the APR is ‘representative’, if this is the case it may only apply to 51 per cent of people who successfully get the loan.

If you are told ‘your rate will be higher due to your personal circumstances’, take some time before you sign on the dotted line and shop around as you may well find a better deal elsewhere.


* Ann Francis is CEO of Cambrian Savings and Loans, which is a community based, financial services co-operative with members across North Wales and Powys.