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Borrowers are taking out larger loans to pay for home improvements compared to five years ago, according to recent figures from Sainsbury’s Bank.
The number of people taking out a personal loan from Sainsbury’s Bank to fund home improvements over the last five years has remained steady at however the average loan value increased to £12,374 in 2018, up from £9,352 in 2014. One reason for the increase in the average loan value could be due to the reduction in rates for higher value loans. According to Moneyfacts.co.uk data, in just five years, the average interest rate charged on a £15,000 loan has dropped by 2.0%, from 6.4% APR in June 2014 to 4.4% APR today.
Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Loan rates have plummeted over recent years, so much so that if borrowers applied for a loan of £15,000 back in 2009 with a fixed repayment term of five years, the average rate was 9.1% APR in June 2009, while in 2014 the average rate for the equivalent loan and term stood at 6.4% APR. Today, the average rate has dropped to 4.4 and rates as low as 2.9% APR are currently available. One of the many reasons to take out an unsecured personal loan is for home improvements, and this can be a cheaper and quicker process to receive funds than borrowing more on a mortgage.”
Summer is often the time homeowners look to carry out improvements on their homes and gardens, and a personal loan can be one way to help pay towards revamping their home. While personal loans can be a good way of funding DIY projects, it is essential that homeowners are confident they can repay the loan. Our loans calculator is an easy way to see how much you would need to pay each month on a loan. Borrowers should also note that the rates on offer are dependent on your credit rating and you may not always be offered the advertised APR.
Home improvements can be a great way of adding value to the price of property and can, therefore, be a worthwhile investment to make, however it is always important to ensure that a loan is affordable and can be repaid if circumstances take a turn for the worse.
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