Home Improvement Loans
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Home improvement lending varies a lot depending on what your property is currently worth, your credit history, the loan amount, and the purpose for which you are borrowing. While a simple kitchen renovation might make do with an unsecured loan, a major renovation might need a secured loan instead.
Mainstream banks like Santander, Lloyds Bank, and TSB tend to prefer applications with a clean credit history, strong property value, and a middle-of-the-range loan amount.
But for those whose needs do not fall under these parameters, an entire market of specialist lenders is available who are willing to consider applications on a case-by-case basis and go through the merits of the application. These specialist lenders are far less visible than mainstream ones.
At ABC Finance, we are a whole-of-market operator that can help you find the perfect lender for your needs, whether it be mainstream banks or specialist secured providers. We do our best to place your case with lenders from whom you are likely to receive a yes, and at the best rate your circumstances can afford.
Home Improvement Loans at a Glance: Updated May 2026
- Representative APR range: 5.7%–6.2% for unsecured loans (good credit, £7,500–£25,000); 25%–49.9%+ for fair/poor credit; 11.7%–46.5% APRC for secured loans
- Loan sizes: £1,000–£50,000 unsecured; £5,000–£100,000+ secured against your home
- Funding speed: Same-day or next working day for approved unsecured applications; 2–4 weeks for secured loans
Home Improvement Loan Rates 2026
As of the time of this writing, the Bank of England base rate was 3.75%. Home improvement loans in the UK are based on a markup on this rate.
The market is split into mainstream, unsecured personal loans offered by top-tier banks and building societies, and on the other end, secured loan products offered by specialist lenders. The former get the most competitive rates in the range of 5.7% to 6.2% APR, for loan amounts between £7,500 and £25,000.
The rates go up as the size of the loan varies from this range. It also goes up if the applicant’s credit history has adverse markers in it. For secured loans, the loan term is also an important variable.
By law, lenders are only obligated to offer their advertised APRs to 51% of successful applicants, which means institutions have a lot of leeway to play with when it comes to APRs. In each of the cases, you can see that adverse credit has an immediate and significant impact on the rates being offered.
Fixed-rate unsecured loans are the norm in this market — your monthly repayment stays the same for the life of the loan, making budgeting straightforward. Some secured products are variable rate, meaning your payment can change as the Bank of England base rate moves.
Home Improvement Loan Calculator UK
The reference table below shows the kind of monthly repayment you might have to incur for home improvement loans taken under good credit and adverse credit situations. We have used representative rates of 6.2% APR for good credit and unsecured loans, while 39.9% for poor credit and a specialist secured loan.
| Loan Amount | Good Credit (6.2% APR) | Monthly – 5 yrs | Total Cost | Poor Credit (39.9% APR) | Monthly – 3 yrs | Total Cost |
|---|---|---|---|---|---|---|
| £5,000 | 6.2% APR | £97/mo | £5,802 | 39.9% APR | £188/mo | £6,768 |
| £10,000 | 6.2% APR | £193/mo | £11,580 | 39.9% APR | £375/mo | £13,500 |
| £15,000 | 6.2% APR | £290/mo | £17,370 | 39.9% APR | £563/mo | £20,268 |
| £25,000 | 6.2% APR | £483/mo | £28,980 | 39.9% APR | N/A — seek secured loan | — |
| £50,000 | 10.2% APRC (secured) | £1,066/mo | £63,960 | Secured lender only | Contact lender | — |
For illustrative purposes only. Your actual rate will vary based on your personal circumstances.
Keep in mind that these figures are representative only. In practice, loans less than £7,500 tend to carry higher rates because lenders feel the administrative cost makes the loan less profitable. So in many cases, taking out a slightly higher loan can unlock a significantly better rate. Again, a longer-term loan incurs a lower monthly payout, but the overall interest that you pay over time is higher.
Unsecured loans greater than £25,000 have very few takers in the market. While NatWest and Nationwide both claim to lend up to £50,000 in unsecured loans for borrowers with strong credit histories, but their rates at such high amounts are significantly more expensive than taking a secured loan.
Use the interactive calculator on this page to get a quick estimate of your total cost specific to your situation.
Monthly Costs
How to use our calculator:-
#1. Enter your loan amount
#2. Input the interest rate (either a whole number, or with decimal places).
#3. Enter the term of the required homeowner loan in years.
#4. Press ‘calculate’ and the calculator will show you your monthly payment.
Eligibility For Home Improvement Financing
While most mainstream lenders have their own eligibility specifications, there are certain baseline conditions that are true for all of them.
The applicant must be above 18 years of age and a UK resident holding a valid UK bank account. In most cases, where smaller loans are concerned, lenders require the applicant to have a regular income of at least £10,500, but for loan amounts greater than £20,000, the requirement is usually £20,000 per year. Lastly, the borrower should not have declared bankruptcy in the previous six years.
Apart from this, credit history matters a lot. Lenders look at factors like any open credit commitments, electoral roll registration, payment history, any County Court Judgements (CCJs), or individual voluntary arrangements (IVAs) in your file.
Lenders are also legally required to assess your residual disposable income as per FCA Consumer Duty rules. This ensures that the applicant earns enough to genuinely afford the repayments, rather than simply being technically able to service the debt.
For higher amounts, lenders prefer to opt for secured loans. In this case, a separate valuation of your property is done to assess your equity. Typically, lenders will not give you more than 85% of the property’s worth, after deducting any existing mortgages and the new loan being considered.
Home improvement loans for bad credit
Poor credit history often shuts most doors for any kind of loan, though there are specialist lenders who are open to considering applications for home repair loans for bad credit on a case-by-case basis.
A specialist lender will carefully segregate the type of bad credit, whether it was a case of missed payments, a default, a CCJ, or simply a lack of credit history due to age and other factors.
Under the Open Banking data changes of 2025-26, lenders can now acquire a digital snapshot of the applicant’s bank statements, letting them understand the latest behaviour towards credit rather than just using the historic data to make a judgment.
Unsecured loans in adverse credit cases usually attract very high APRs, ranging from 25% to 49.9%, with severe restrictions on borrowing limits (typically less than £10,000 depending on loan size).
Therefore, most borrowers find it easier to acquire a secured loan in such cases. Using a property as collateral brings down the risk for the lender, making approvals more likely and rates much better.
However, it is important to think carefully before securing other debts against your home. In case you fail to meet the repayment obligations, the lender can seek to have the property repossessed.
For cases that involve a bankruptcy or an active IVA, lenders typically require you to be discharged at least 12 to 24 months prior to the fresh application being considered.
At ABC Finance, we work with specialist lenders to make sure they carefully assess your application on the basis of current financial behaviour rather than simply from a historical lens.
Comparing Renovation Funding Options
The right funding option for your case will depend on how much funding you need, what kind of equity you hold, your credit history, and the speed at which you need your funds. Below, we help you understand the two main loan options for home improvement available to you.
Personal loans vs HELOCs
A Home Equity Line of Credit (HELOC) is a secured homeowner loan that works like a line of credit available to you, rather than a lump sum amount made available to you at the time of approval of your loan application. You can draw as much as you need, and interest will be charged only on the drawn amount. You can repay the amount and then borrow again, as long as the line of credit allows it.
This product is far more common in the US than in the UK, but there are a few lenders who are starting to offer it here as well. But more commonly, the product you can find in the UK is a simple secured homeowner loan or a further advance on your existing mortgage.
Apart from these two, a third option is remortgaging. If your existing home loan mortgage is near expiry and will not bear a significant repayment charge, closing it out and then taking a larger mortgage can be a significantly cheaper option for home improvement. The rates for property mortgages are much lower than those for secured loans.
However, the catch is that remortgaging takes a considerable amount of time. The valuation process itself can take anywhere from 4 to 8 weeks. Moreover, the overall repayment amount will be higher since the terms for a mortgage are usually 20-25 years.
If the home improvement project is small, a 0% purchase credit card or a 0% money transfer card can also be a good option to consider. Typically, these cards offer 0% interest during the promotion period of 12-24 months, and if you are confident of repaying the amount within that time, then it becomes the cheapest available option. However, the catch is that APRs after the promotion period are typically high, so you need to be disciplined with your repayment plan.
UK Government grants for home improvement projects
For certain home improvement projects, such as solar panel installation or other energy efficiency improvement initiatives, the government also provides certain types of grants. These should also be taken into consideration during planning.
For example, The Warm Homes: Local Grant can provide funds of up to £15,000 for energy efficiency improvement projects for eligible low-income households in England with no repayment required.
The ECO4 scheme (running until 31 December 2026) can fund insulation and heating upgrades entirely for qualifying households.
The Boiler Upgrade Scheme offers £7,500 toward a heat pump installation with no income requirement.
Check your eligibility for these schemes in case you are planning any of these before applying for a home improvement loan. It could save you thousands of pounds.
Common Projects Covered By Renovation Loans
There is a wide variety of possible home improvement projects that may require funding. The table below enumerates most of the common cases, with some indicative costs and loan types that might be suitable for each of them.
| Project | Typical Cost (2026) | Best Loan Type | Grant Available? |
|---|---|---|---|
| Kitchen renovation | £5,000–£30,000+ | Unsecured personal loan or secured for larger budgets | No |
| Bathroom upgrade | £3,000–£15,000 | Unsecured personal loan | No |
| Loft conversion | £20,000–£60,000 | Secured loan or remortgage | No |
| Single-storey extension | £30,000–£80,000 | Secured loan or remortgage | No |
| Solar panel installation | £5,000–£12,000 | Unsecured loan or 0% government-backed loan (from 2027) | Yes — Warm Homes Local Grant (eligible households) |
| Air source heat pump | £8,000–£15,000 | Unsecured loan or BUS grant | Yes — Boiler Upgrade Scheme (£7,500 grant) |
| New boiler | £1,500–£4,000 | Unsecured personal loan | Possibly — ECO4 (income-eligible households) |
| Windows and doors replacement | £3,000–£12,000 | Unsecured personal loan | Possibly — ECO4 / Warm Homes Local Grant |
| Loft or cavity wall insulation | £300–£1,500 | Unsecured personal loan or grant-funded | Yes — ECO4 / Warm Homes Local Grant (eligible households) |
| Conservatory or orangery | £8,000–£30,000 | Unsecured loan or secured for larger budgets | No |
| Structural repairs (subsidence, damp, roof) | £2,000–£50,000+ | Secured loan for larger jobs; unsecured for smaller ones | No |
| Full interior redecoration | £2,000–£10,000 | Unsecured personal loan | No |
Note: Project costs are indicative market estimates for 2026. Actual costs vary significantly by location, specification, and contractor. Always obtain multiple quotes before borrowing. Grant availability is subject to eligibility criteria and funding remaining — check with your local authority or gov.uk for current status.
Energy efficiency projects such as insulation, heat pumps, or solar panels often have related government initiatives and grants available to them, especially for low-income households, so it is a good idea to always check.
Secured mortgages are best for large projects that involve structural work, like a loft conversion or installing extensions. The higher outlay means rates for unsecured loans would be extremely high.
One thing to be kept in mind is that certain lenders do not allow applicants to use home improvement loans to fund structural renovations if more than 25% of the surface area of the building is undergoing changes. Therefore, it is best to confirm the conditions with your lender before making an application.
At ABC Finance, we do a thorough comparison of all possible alternatives available across the market to determine the best possible option for your specific case. We ensure that we have the numbers ready for all possible scenarios before your application goes in, so that you are clear about what is achievable and what the applicable rates are before your case is ever evaluated.ABC Finance Ltd is authorised and regulated by the Financial Conduct Authority. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Rates and figures correct as of May 2026. This article is for information purposes only and does not constitute financial advice.
