5 ways to borrow money for home repairs

Encountered a home repair problem that need fixing immediately but don’t have cash? Here’s how to borrow money to fix the problem.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

A house being constructed in the countryside

Image source: Getty Images.

When you are a homeowner, the need for home repairs can arise when you least expect it. An emergency fund can help cushion you from the resultant financial blow. However, if you do not have a few thousand pounds in cash stashed away, hold off panicking when you notice a crack in your wall or your drain gets clogged. In today’s competitive lending market, it is relatively easy to find a lender to finance your home repairs.

Here is a quick rundown of some of best options for borrowing money to cover your home repairs.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

1. Low- or 0%-interest credit card

For less costly home repairs, you can opt for the sheer convenience of plastic, particularly if you can pay the amount off quickly.

The best card in this scenario would be one with a low or even a 0% introductory rate for purchases. There are several 0% credit cards in the UK worth exploring. If you have a solid credit score, your chances of getting approved for a 0% credit card are good.

However, it goes without saying that before taking out a credit card to finance home repairs, it’s good to first confirm your ability to pay on time each month and to clear the balance before the introductory period ends.

2. Home equity loan

If you have equity built up in your home, you can borrow money against this to finance costly home repairs.

‘Home equity’ refers to the difference between your home’s current market value and the amount you owe on your mortgage. For example, if your home’s current market value is £250,000 and your mortgage balance is £150,000, you essentially have £100,000 in home equity. You can use a portion of this money as collateral for a loan to finance home repairs.

One major advantage of home equity loans is that their interest rates are quite reasonable. Like credit card debt, however, these loans can be dangerous if you are not a disciplined borrower. You might incur harsh penalties for late or missed repayments, with the worst being the repossession of your home. Late and missed payments can also tank your credit score. It might, therefore, be wise to work out a repayment plan before you apply for a home equity loan.

3. Personal loan

A personal loan is another viable way of borrowing money to finance costly home repairs. Personal loans are offered by banks, credit unions, and savings and loan associations and are a quick way to drum up cash. With a sufficient income and a decent credit score, you can get a personal loan in a few weeks.

One major drawback of personal loans is that they come with high interest rates. Different lenders will, however, charge different rates, so it might be a good idea to shop around and compare the rates on offer. Your regular bank may give you, as an established customer, a better rate than another lending institution that does not know you. Also, if you are a member of a local credit union, you might be able to get an inexpensive personal loan.

The key with personal loans is to pay them off sooner rather than later; otherwise, the high interest rate could make your home repairs expensive.

4. Home improvement loan

Home improvement loans are available from banks and credit unions and have one main advantage: speed.

Other loans, such as home equity loans, take a lot of time to process, and it can be several weeks before you actually lay your hands on the money. Home improvement loans, on the other hand, require no appraisal, and the paperwork is also minimal.

One possible drawback of these loans is that interest rates might be a little higher than those of home equity loans. The repayment term might also be a few years shorter, translating to higher monthly repayments.

5. Mortgage refinancing

Converting your old mortgage to a new loan is another option for financing costly home repairs.

This option particularly makes sense if the mortgage interest rates on offer now are several percentage points below your current mortgage rate, and if you have a sizeable amount of equity in your home (if your home’s current market value is greater than the amount you owe). More home equity means that you will be able to borrow more. 

Mortgage refinancing can also be a good option if the home repairs you are undertaking will actually add notable market value to your home. 

Final word

Finding a lender to finance home repairs is quite easy today. Many lenders are willing – or should we say eager – to lend you enough to cater for your home repair needs. What’s hard, however, is sifting through these lenders’ ever-growing menu of options to find out what works best for you. Each of the available financing options has its pros and cons, but if you carefully analyse your individual circumstances and your financial needs, you may find one that is a good fit.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

MyWalletHero, Fool and The Motley Fool are all trading names of The Motley Fool Ltd. The Motley Fool Ltd is an appointed representative of Richdale Brokers & Financial Services Ltd who are authorised and regulated by the FCA, and we are permitted in this capacity to act as a credit-broker, not a lender, for consumer credit products (our FRN is 422737). The Motley Fool Ltd does not have permissions for, and does not advise on, investment products and services, but may provide information on investment products and services.

The Motley Fool receives compensation from some advertisers who provide products and services that may be covered by our editorial team. It’s one way we make money. But know that our editorial integrity and transparency matters most and our ratings aren’t influenced by compensation. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. The Motley Fool has recommended shares in Lloyds, Tesco and Barclays.

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »