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How to Finance a Loft Conversion?

  • Posted by: Sebastian Grayson
How to Finance a Loft Conversion

While not as big a financial project as moving house, undertaking a loft conversion also involves meticulous financial planning to ensure everything runs without a hitch. 

Depending on the urgency, complexity and size of the loft conversion, there are different ways to go about financing it, some of which will be covered here. Ultimately, there is no one way to pay- but you will want to make sure that your chosen method of payment will see you through to the end of the project to avoid prolonging stress and disruption for you and your neighbours. 

 

Here’s a selection of ways you might go about financing your loft conversion:

 

Personal Savings

Arguably the most obvious payment method, taking the time to put earnings away over a prolonged period of time will give you a solid foundation without having to worry about too much borrowing. However, it can take months or even years to save the tens of thousands of pounds typically needed, so may not be the perfect option for those needing a quicker space expansion. 

 

Remortgaging

If you choose to remortgage your home, you can borrow additional funds against your property’s increased value. If you have a good amount of equity in your home, and you can secure a low interest rate, there is no reason why this could not qualify as an affordable way to finance a loft conversion. 

 

Home Improvement Loan 

A loft conversion would usually come under the types of refurbishment covered by a home improvement loan. Generally these loans are unsecured and don’t require a collateral, which is better for the borrower in terms of asset protection, if somewhat less secure when it comes to financing the project to completion. 

 

Equity Release

Equity release schemes allow you to access the equity in your home in a lump sum or in installments. However, this is generally only an option for homeowners aged 55 and above. While this is a good option for those worried about remortgaging, it does decrease the inheritance value of your property.   

 

Government Schemes

The government offers various home improvement loans which you may be eligible for depending on where you are located. Energy efficiency upgrades, if this is incorporated into your loft conversion plans, are particularly favoured by the government. A government loan will probably fail to cover the entire cost of your project, but can help reduce the cost of other expenses such as insulation. 

 

Hire Purchase Agreements

Some companies may allow you to spread the cost of the loft conversion over several installments. While this appears a much more flexible option, it is best to still pay off the project as quickly as possible to avoid compiling great amounts of interest. 

 

To conclude, different options will suit different circumstances. If you have reached the point where you are thinking about how to finance a loft conversion, then you probably have a good idea of the unique features and requirements of your home already. As long as you are confident in your home and your finances, a loft conversion is an exciting and valuable project to undertake.

 

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Author: Sebastian Grayson