Professional Loans Blog

Adding an extra room in your loft or just carrying out routine maintenance on an aging property is expensive and will need financing; a home remodeling loan (sometimes also called a “Home Improvement Loan”) is probably the only way this will become possible. Home remodeling can be costly, involving contractors, supplies, and tradesmen such as carpenters, plumbers, roofers, and electricians.

Two types of remodeling loan exist; secured loans which are based on the equity in the property and those that require no security at all. Fortunately loans that do not require the home itself as equity are even available to brand new homeowners. Finance organized to improve a home is normally arranged to run for up to fifteen years when equity is not required.

The only condition made on no equity finance is that the owners must have a joint income which is lower than the county limit where the property is but reaches the limit specified by the lender. Certain facts are researched by the lenders; like the type of property and reasons for the loan but essentially, this type of loan is easy to arrange with only a small amount of documentation to complete.

If your property has increased in value over the years and is now worth more than you owe on it then you may prefer a remodeling loan that uses this spare equity. This is not the same as your original mortgage; instead, it is an additional loan that is often easier to obtain and process compared to a regular mortgage; usually providing lower interest rates than other types of finance.

Obviously the amount you are able to borrow using a secured loan will depend on the value of your home. The lenders need to be assured that there is in fact equity in your property and that any loans already outstanding will not interfere with any new arrangement made by them if they agree to a loan.

At this stage, everything is still under negotiation and is only finalized when the applicant agrees to the amount, payments and any conditions. Whilst most loans are based on a set percentage of the property’s value, some lenders will agree to fund up to one hundred and twenty five percent of the valuation.

Any loan secured on a property has a risk attached and that is especially true when the loan is large as payments can become difficult to make at which point the creditors can move in and take your home away. Do not arrange a remodeling loan if it is going to cause any financial strain especially if it is only for remodeling but restrict the amount to cover for important repairs
or restoration only.

Looking Hunting for more Home Improvement and remodeling loan information, then check out our Home Improvement Loans section for more resources and ideas.