Home improvement loans ‘can’ be a good way of increasing the value of your house. A nice new kitchen or double glazing can add thousands and result in you home becoming easier to sell when the time is right.
Whether you should consider taking one a loan depends upon your credit. If you have adverse credit you are only likely to be able to get a loan that is secured on your property. If you lose your job you may be increasing the value for the banks pending repossession. If you subsequently try to get assistance from your local council, your home improvements will be deemed to have made you voluntarily homeless and they won’t help you. Sometimes it is good to just accept what you have.
If your credit is good and you can get an unsecured loan at an attractive rate of APR it is definitely worth considering. You would, however, be well advised to do a bit of research to find out what new home buyers are looking for. The last thing you want is to spend thousands of pounds and find out that it has achieved nothing.
It’s always good to add value to your home as most of us will come to sell our home at some point and will want to maximise what we can make from the sale. However, in this day and age, a lot of people don’t have the money to just go ahead and make improvements to their homes, so there are loans available to do just that. Are they a good idea?
Basically, as with any loan, it’s important to look at how much you want to borrow - don’t underestimate the cost of the work - what it will cost you over the term of the loan; what are the repayments, how long will you be paying the loan for and how much will you pay back in total over the term of the loan?
You then need to consider how much value, say, a new bathroom or kitchen will add to your home. If the value added is more than what you have paid over the life of the loan then it’s clearly worth it, but you should make sure you do your research first: look at house prices and sale prices for homes with and without the feature you are thinking of adding to your home, such as a fitted kitchen, and also factor in the cost of the hassle of having the work done. If it’s worth it then I would say a home improvement loan is definitely a good idea - but you need to do your homework and not just jump right in, as with any loan really.
A home improvement loan can be a good idea, but only if you research carefully what you are thinking of spending it on.
Some improvements will add value, but some changes won’t - and you must offset the cost of doing it against the value gained. In a small property, losing a bedroom to make a bathroom bigger might not be a wise move. However, adding a conversatory off the kitchen if you have masses of garden space, might. Loft conversions are a popular choice.
A massive rise in home improvement TV programmes has everyone wanting to be the next House Doctor. Seeking some professional advice from a local estate agent might be worthwhile, as well as comparing several quotes (and weighing up if you can do it yourself, or if you should get the professionals in) and getting recommendations.
If you are just looking to do a quick sale on your house, you miht get better value from a simple declutter, a cheap new carpet, and some cans of white paint.
If you do take out a loan, shop around for the best APR and terms that suit you - if you don’t want to speak to an independent financial advisor, use websites like Money Saving Expert to help you make a more informed choice - and be careful you don’t overstretch your finances and then struggle to pay it back.
There are many elderly and disabled people with debt problems that may need debt advice. Whilst debts are a problem, they aren’t an insurmountable obstacle. You may have more solutions available than you think!
It is a good idea to check to see if you are getting the government benefits you are entitled to. For example, if your husband is caring for you part time because of your bad health you may be entitled to a weekly payment of £48.65. You could also be entitled to a slightly higher pension, reduced council tax payments etc.
If you are over 60 and living in rental accommodation you can’t afford you should consider seeing what the state can offer. Whilst a standard private rental costs upwards of £500 per month a council apartment will only cost half that amount. Your local council has an obligation to provide assistance for you if you could be made involuntarily homeless as a result of unaffordable accommodation.
These could potentially add several hundred pounds of potential income and turn your debt problem around instantly.
The most important thing to do when you are in debt is to take control. However that is a medium term objective, the most important short term thing that you can do is quite simple, but may be very hard, namely to clearly list all the debts you have and how important they are. As well as listing the debts you need to get straight the relative cost of the debts, in terms of minimum repayments and interest charges.
Your top priorities are mortgage or rent, fuel and power, money owed to government or local councils or to the court system or for childcare. In parallel with this, you should be looking in your library, or at your local Citizens Advice Bureau, or on the internet for as much information about debt support and help you can find, for example www.adviceguide.org.uk/d_help_with_debt_fact_sheet.pdf
Your next priority is to establish your budget. You need to be brutally honest with yourself, because it is only once you can see how much you have coming in and how much going out that you can start to remedy the situation. It is usually straightforward (albeit painful) to cut 10-15% off your budget by cleverer shopping (eg switching to cheaper providers, or doing without).
Once you have done this you can focus on paying off you debts, usually starting with arrears on priority debts, and then tackling the most expensive debt - by repayment, or by moving to cheaper debt if that is possible. It is also possible to do some extra stuff (eg ebay) to raise a little extra income.
I know it’s easy to say. But firstly; DON’T PANIC.
If your debt is severe, you need to go see a debt counsellor. If not, don’t. They are oversubscribed and unnecessary for your problem. Free personal help is invaluable for those who REALLY need it.
Do these things first: Shift your debt to a cheaper credit card - used properly this can be the cheapest form of borrowing.
Get a cheap personal loan - this can allow you a better structure to repay outstanding debts.
Use SAVINGS to get rid of the debt - if you’re paying more interest than what you’re gaining in savings it makes more sense to shift them.
You can remortgage your house in order to pay off debts - this is risky but can be very useful if there are no other steps.
The key is to go to a counsellor to figure out what you need to do in serious circumstances. If you don’t owe THAT much, there is heaps and heaps of invaluable information all over the internet for you to stick your teeth into.
If you are worrying about your mounting debt and finding yourself constantly juggling to try to meet your minimum repayments it’s time to take action.
The first, most important thing is to admit that you have a problem. We all feel a little hard-up sometimes but true debt needs tackling.
Sit down and make a list of your income and outgoings - sounds boring, I know - but it really will help focus your mind on where your money is going. A second list of all outstanding loan and credit card amounts will then help you see the size of the problem.
If your debt isn’t too large, perhaps cutting back on the non-essentials in your outgoings column and paying those amounts off your credit cards will start to get the situation under control. If things have gone further than that, or your income falls well short of your expenditure perhaps professional help is required.
The citizen’s advice bureau and national debt helpline will help you to contact your creditors and arrange more manageable repayment plans; sometimes they can even negotiate a better interest rate to enable you to make inroads into your debt.
Having professional help and a clear plan of action will reduce the worry and help you see a clear, if gradual, way out of debt.
The first step to staying out of and avoiding debt is to make a list of everything that you spend each month, both essential and non-essential spending. This is important to see what your outgoings are and whether you are living beyond your means. Once essential bills, mortgage, etc are taken care of, you can begin to look at personal spending. Anything that can be cut back on, such as the cost of groceries, eating out, holidays and clothes should be considered carefully.
Doing things like taking your own packed lunch to work, not buying takeaway coffees, and walking or cycling to work can all contribute to lowering monthly spending.
Utility bills can be lowered by switching to a cheaper provider and it is worth shopping around for a better mortgage deal. The cost of running a car is also a major drain on a lot of people’s finances.
Credit cards and store cards should be used sensibly and paid off in full each month, to avoid the interest on the debt increasing. If you are liable to overspending, it is a good idea not to have any credit or store cards and use cash or a debit card instead. If you already owe a great deal of money, get advice on some methods of debt reduction.
To avoid future debt, try to build up some savings, by making use of your ISA allowance, and don’t be tempted to keep up with the Joneses by having the latest of everything and taking out a loan to get it.
Nobody wants to be in debt, especially to the government, but student loans are a necessary evil if you want to further your education and career prospects in this day and age. The number of people attending university is too high for the state to support alone so it is down to individuals to contribute towards the cost of their own education.
It isn’t as if you are put in a position where you have to find money for your repayments before you find work. Every student who takes out a student loan is given as much time as is needed to find a job and only when they earn over £15,000 a year do they have to start paying the money they have borrowed.
If the government made changes to educational policy so that only the very best students could attend university there wouldn’t be a need for a student loans system. Would we not have been better served by providing full support for the good academics and those in shortage areas, such as engineering, rather than all and sundry?
Student loans are a very good way of staying on top whilst studying. They have a low interest rate when compared to high street banks. The last thing you need when you are doing your dissertation is the worry of money over your head so go for it and apply.
One thing you should be aware of is that if you miss the deadline it will cost you as you are put into a low priority group. I have had this fustrating sensation in my first year of study so make sure you know your deadlines.
If someone tells you that a loan is bad and even if you think you don’t need a loan, just think of it as another way of making money. For example, get a your maximum loan and leave it in a nice and healthy high interest savings account for a few years. At the end of your course pay it all back and have a tidy sum of money to yourself for nothing!