Home improvement is all the rage right now. TV shows such as Grand Designs and The Restoration Man all command huge audiences, with millions of people sitting down to watch hapless home owners make a complete hash of their crazy design projects. Not surprisingly, this inspires an awful lot of home owners to ‘have a go’ at doing their DIY projects.

Adding a new kitchen, bathroom or loft conversion will cost you. How much the job costs is dependent on the scope of the work and the specification of materials used. If you can do much of the work yourself, it shouldn’t be too expensive, but if you need to hire a team of contractors, the bill will be a lot higher. To be able to afford this type of work, you will need to look at funding options, and if you don’t have a good credit history, your options are limited (click here if you have had a bad credit rating). So what is the best way to fund home improvements?

Cash is King

Cash is always the best way to fund any type of home improvement project. Paying with cash means the job will be cheaper, as you are not paying any interest. If you have significant savings, this is ideal. However, if you are using up all of your savings to pay for a new kitchen or conservatory, be careful as you could end up in a corner should the cost of the project overrun.

Credit Cards

Credit cards are very useful. You can use a credit card to pay for materials and any items you buy from a supplier. Interest free credit cards are like cash – they cost nothing to use. Using a credit card to pay for things will also protect you from dodgy merchants or sub-standard materials, because you can claim for a refund if it all goes horribly wrong. On the downside, you probably won’t be able to pay trades with a credit card.

Personal Loans

Personal loans are a popular way to fund a home improvement project if the cost is less than £20k. Applying for a personal loan is quick and easy if you go online. In most cases, you will have a decision within minutes. For people who have a good credit history, interest rates are relatively low.

Secured Loans

Secured loans are suitable for more expensive projects, i.e. more than £20k. Repayments are lower than unsecured personal loans, because your property is used as collateral for the loan. However, if you default on the repayments, you might lose your home.

Mortgage Finance

If you have equity in your property, you might be able to add some extra on to your mortgage in order to fund a home improvement project. The extra monthly repayment will be affordable, but it will cost you more in interest in the long run.

Think very carefully before you borrow money to pay for a home improvement project. If you can’t afford the extra cost, wait until you can.