The right home improvements
A study by LV= last year found that most estate agents agreed that poorly executed home improvements could actually devalue a property.
The consensus was that a well-installed new kitchen could add around 2.5% to the price of a home, on average, while a good new bathroom or landscaped garden can increase the worth by an average of 2.2%. That means if you are selling your home for £200,000, you could add over £4,000 to the price with a new bathroom.
One of the top improvements, however, is a decent loft conversion, with estate agents estimating that this kind of structural addition could boost a property’s price by 8% on average.
Sarah Beeny, the star of many Channel 4 property shows and the creator of free property listings website Tepilo.com, believes creating the impression of space or even building an extension is the best way to enhance a home’s value and encourage a sale.
“Square footage is a sure bet to adding value – next up would be to clean the property inside and out. Nobody wants to move into someone else’s grime,” she explained.
“Re-tiling and re-grouting the bathroom and kitchen will make a vast difference and freshen the place up. Also, make the very most of even the smallest outside space.”
Sarah also warned against that common DIY pitfall – biting off more than you can chew. “Taking on a job that is bigger than you perhaps realised and then getting stuck in the mud with it is a common problem. The way to get around this is to make each job you plan on doing is quantifiable – make sure you have planned it carefully and have all the right tools and materials before starting.
“At the end, always clear up before you start the next job – that way they are a series of DIY jobs rather than a growing sea of chaos.”
Don’t spend too much
Of course, it’s essential to set a realistic budget when doing up your home. You don’t want to be left out of pocket because you’ve spent more than the value you’ve added.
Sarah said: “You need to work out how much the property is likely to be worth and then you can work out how much you can afford to spend - you don’t want to spend more than the property is worth.
“However, if you plan on being there for a long time and can afford it and works will really improve the way you live in a property then I would suggest you go ahead anyway.”
Funding your plans
So how do you plan to pay for your plans? The best way to do this will depend on your circumstances and how much you want to borrow.
Here are some different ways to fund your home improvements.
A lick of paint…
If your plans only involve a bit of painting or gardening, and you don’t want to dip into any savings, then a 0% credit card could be your best bet.
The longest interest-free period available is with the Marks & Spencer Credit Card, which gives new customers 15 months at 0% on new purchases.
After that, it charges a representative annual percentage rate (APR) of 15.9%, so you’d want to clear your debt well within that period. Read our review of the card to see if it’s right for you.
If you want some cash to make energy efficiency improvements to your home then your local council or energy provider might stump up some cash to help. Try the Energy Saving Trust website to see where you might be able to bag some financial support.
If it’s a bigger job...
If your plans are going to need a bit more cash than a credit card will stretch to, then you might want to consider a low cost loan.
According to Sainsbury’s Finance, one in five of the personal loans taken out in the first half of last year was to fund home improvements, with people borrowing an average of £9,225 to spruce up their properties.
There are some excellent rates available if you are planning on borrowing more than £7,500. For example, if you want to spread the cost over three years then both Sainsbury’s Finance and Marks & Spencer offer a representative APR of 6.9%.
Lenders have to offer at least 51% of successful applicants that rate or better, but 49% could face a higher charge.
At that rate, you’d pay £230.52 a month over three years, meaning a total charge of £799.
M&S will offer that representative APR if you want to borrow over a longer period too.
If you plan to repay the loan when you sell the property then it’s worth noting that most lenders will impose an early redemption charge, usually a month’s interest, so don’t forget to factor that into your sums.
An extension or major refurb…
What if you need big money to fulfil your home improvement dreams?
One option is to approach your mortgage lender and renegotiate your loan to free up some cash. However, you should be very careful not to take too much equity out of your home.
The very best mortgages are only available to borrowers with a deposit or equity of at least 25%. If your home improvements don’t boost the value as much as you hope, you don’t want to be left unable to find a good mortgage rate because you’ve spent the equity.
Another option is a secured loan – lending that’s directly secured against your property. You may be able to find a cheaper rate than with an unsecured loan and you can usually arrange for these to run alongside your remaining mortgage repayment period – or clear it sooner if you prefer.
Of course, if you get into difficulties with a secured loan, your home could be at risk, so you should think very carefully before taking on this kind of debt.
A quick word on home insurance
You might be absolutely confident that you have the skills required to feature in Grand Designs, but just in case your ambition is greater than your skill and something goes horribly wrong, it’s worth making sure you have comprehensive home insurance in place.
Not every policy protects against DIY disasters, so make sure you know what yours will and won’t pay out for, before you embark on any work.
And always get the professionals in if you are planning on any structural, electrical or plumbing changes.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.
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