Can I get a secured loan for an extension?

Yes. Larger projects like extensions are a common reason people use a secured loan, because the amounts often exceed what an unsecured personal loan will cover. How much you can borrow depends on your equity and what you can afford.

Is a secured loan better than a personal loan for home improvements?

It depends on the size of the project. A personal loan is usually simpler and does not put your home directly at risk, but limits are lower. A secured loan allows larger sums over a longer term, at the cost of securing the debt against your home.

Will home improvements add enough value to cover the loan?

Not always. Some improvements add value or cut running costs, but many cost more than they add. Treat any value uplift as a bonus rather than something to rely on, and borrow based on what you can afford to repay.

How much can I borrow for home improvements?

It is based on the equity in your home and your affordability. Secured loans can range from a few thousand pounds upwards, with the limit set by your combined loan to value and the lender's criteria.

Can I repay early if I sell the house?

Usually yes. If you sell, the secured loan is repaid from the sale proceeds after your main mortgage. Some deals carry an early repayment charge within a fixed period, so check the terms first.

Is my home at risk with a secured loan for improvements?

Yes. The loan is secured against your property, so if you fall behind on the payments the home can be repossessed. Only borrow what you can comfortably afford.

Secured Loan for Home Improvements

An extension, a new kitchen, or a full renovation can easily cost more than savings or an unsecured loan will stretch to. A secured loan, also called a second charge mortgage, is one way to fund bigger projects by borrowing against the equity in your home. Here is how it works for home improvements, and when it is a sensible choice.

Why people use a secured loan for improvements

Bigger sums. Unsecured personal loans usually top out somewhere around 25,000 pounds. A secured loan can go well beyond that, because it is backed by your property.
Longer terms. Spreading the cost over a longer period keeps the monthly payment lower, though it means more interest overall.
Keeping your mortgage. A secured loan leaves your main mortgage untouched, which matters if you are on a cheap fixed rate. See what a second charge mortgage is.

How it works

You borrow a separate loan, secured behind your existing mortgage, and use it to pay for the work. You then have two monthly payments, your mortgage and the secured loan. The amount you can borrow depends on your equity and on what you can afford.

Secured loan vs the other ways to fund improvements

Savings. Always the cheapest if you have them, because there is no interest to pay.
Unsecured personal loan. Good for smaller projects. Your home is not directly at risk, but the borrowing limit is lower and the term is shorter.
Further advance. Extra borrowing from your current lender, often the cheapest secured route when available. See further advance or second charge.
Remortgage. Rolling the cost into a new, larger mortgage, which can be cheapest if your deal is ending. See second charge vs remortgage.
Secured loan. Useful for larger amounts when you want to keep your mortgage as it is, or when a remortgage or further advance is not the right fit.

Could the work pay for itself?

Some improvements add value to your home or cut your running costs, which can soften the cost of borrowing. Energy efficiency upgrades are a good example, since they can lower bills and lift your home's rating. Our guides to EPC ratings and your mortgage and funding EPC improvements cover this in more detail. Just be careful not to assume a project will add more value than it costs, because that is often not the case.

The costs and the risks

A secured loan carries a higher interest rate than a main mortgage, plus fees, so it is not free money. More importantly, the loan is secured on your home, so if you cannot keep up the payments the property is at risk. Borrow only what the project genuinely needs, keep the term sensible, and do not bank on a valuation uplift that may not arrive.

When it makes sense, and when it does not

A secured loan can be a reasonable way to fund a substantial, lasting improvement when cheaper routes are closed and the payments are comfortably affordable. It is the wrong call for small jobs an unsecured loan would cover, or for projects you are not sure you can afford. If in doubt, get the numbers checked before you commit.

Before you borrow against your home for improvements, it is worth comparing every route. Debbie at DS Financial can look at a further advance, a remortgage and a secured loan together and tell you which fits best. See also our remortgage guide.

General information, not financial advice. A second charge mortgage or secured loan is secured against your home, which may be repossessed if you do not keep up the repayments.