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Pros & Cons of Home Improvement Loans

Do you need to put a brand new roof over your house or build an extra room to accommodate your expanding family? It’s likely that you don’t have enough money to pay for these costly improvements and repairs sitting around. That’s why you can get home improvement loans.

Mortgages for Home Renovation and Security

Secured home improvements loans makes use of your home as collateral. It is also known as the home equity loan also known as a secondary mortgage. The advantages of this kind of loan is that you typically obtain a larger loan amount with a fixed interest rate with a period of 10 to 15 years to repay it. Another benefit for this type of loan, especially when it is it is used to fund home improvement projects is the fact that interest rate is typically tax-deductible. One of the major disadvantages is that if you fail in payment and the lender is able to close on your property. The eligibility requirements for this kind of loan, the amount you are eligible for, and the interest rate depend on the condition, age and location of the property and also on your credit score. Additionally the terms of the loan could hinder your ability to rent your home out.

Non-secured home Improvement Loans

There is also the option of getting an unsecure loan to finance home improvement. This kind of loan requires no collateral, making it more risky for the lender, however it is less risky to the person who is borrowing. The amount of loans that are secured tends to be less, but with greater interest rates, and are typically repayable in the period of 10 or less years. How much of an interest rate and how much you are eligible for will be largely dependent upon your credit rating. In addition, interest on unsecured loans aren’t tax-deductible.


The home improvement loan is a great option for making repairs or upgrades which will boost property value. home. The right home improvement plan can boost the value of your home so that the loan can pay for the property. A loan can also allow the homeowner to make repairs rather than waiting until you save enough funds that could make the damage worse and get more expensive.


If an improvement loan for your home can benefit the value of your home depends on the state of the economy. In a down or volatile economy the interest rates will tend to rise, meaning that your loan may be more expensive in the end as opposed to any growth in the property value that your home improvement projects will bring about. Additionally, poor work from the contractors you choose to hire to complete the work could cause your house to fall in value which is why it’s essential to study and plan the most efficient way to use your loan to reduce the risk.