A home improvement loan can help cover the costs of a whole range of home projects. Maybe someone wants to install a new dream kitchen, complete a loft conversion to add value to the property, or have urgent repairs that need to be carried out. As long as it is for qualified home improvements, a home improvement loan can be an affordable way to finance work.
What is a Home Improvement Loan
A home improvement loan is a personal loan taken out to pay for building works being carried out on a property that a person owns.
It provides a lump sum amount paid directly into their bank account that they repay in regular fixed monthly payments over the loan term. The fixed monthly repayments mean that it should be easy to budget for and can help spread the cost of potentially expensive projects such as roof replacements, kitchen remodels, and foundation repairs. It can even help pay the costs of damage caused by natural disasters that a homeowner’s policy might not cover.
Most home improvement loans are taken as unsecured loans. Still, some financial institutions may also offer the option of taking out a secured loan with an asset such as a vehicle used as the collateral.
Other types of home-related financing (such as a Home Equity Loan or a Home Equity Line Of Credit) require borrowers to use their property as collateral and put a lien against their home. If they have trouble making the repayments on a HEL or HELOC, their home is at risk of foreclosure, with the proceeds of the sale being given directly to the lender to cover the money they owe them.
How To Get a Home Improvement Loan
When applying for a home improvement loan, people need to know two important numbers – the anticipated cost of the renovations/repairs they want to carry out and how much they can afford to make as a repayment each month. Once they know those figures, they can start to look at reputable lenders and what they can offer them.
Using some basic information, a person should be able to apply online with most banks and financial institutions and get a quick response on their eligibility for a home improvement loan, how much they can borrow, and at what rates/terms.
Each lender will have different criteria that they check to see if a potential borrower is eligible for a loan and the terms that they will offer them, but as a general rule, these usually include:
- Credit score
- Income and regular expenditure (to confirm that they have the means to make the repayments)
- How much they want to borrow
- The value of any collateral (if taking out a secured loan)
- Their state of residency
Once a lender has approved an application, the borrower will likely be connected with a loan specialist to confirm and verify their information and draw up a loan agreement. Once they have been approved, they review and sign the loan agreement, and the lender should be able to deposit the money into their bank account.
About OneMain Financial
OneMain Financial is the leader in offering nonprime customers responsible access to credit and is dedicated to improving the financial well-being of hardworking Americans.