Consumers turning to secured loans for home improvements
January 22, 2008
Recent data has shown that many homeowners in the UK are taking advantage of soaring property prices, and are turning to secured loans in order to fund home improvements that could potentially further raise the value of their homes. Many homeowners have seen their property value rise by thousands of pounds in the last year – it is reported that the average property in the UK is rising in value by around £50 per day. With soaring equity levels homeowners are able to enjoy increased borrowing power in the form of secured loans.
A recent survey carried out by the AA indicated that one in five homeowners have spent money on converting spare space in the home into living space, with around ninety billion pounds having been spent on this type of home improvements. This is the type of home improvement that can improve the quality of life of those living in the home, and can add a substantial sum to the value of the property, which means that often the cost of the loan taken to fund the improvements could be covered by the rise in the property value.
Around £10,000 per home was spent on this type of improvement on average, and experts state that this kind of project can indeed improve the value of the property.
One official stated: “It seems a large number of people are getting into debt to develop. No doubt, the thinking behind this is there will be a return on investment.”
However, experts also warn consumers to think carefully before taking out a large secured loan, as with the interest rates rising and more expensive repayments some may struggle to keep up with repayments, which could in effect mean losing the home altogether.
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