If you want to improve your home but don’t have the budget or don’t have the savings in cash, a home improvement loan can help. These loans are offered across the UK, including in Wales, Scotland, and Ireland – giving homeowners opportunities to invest in their home for energy efficiency, safety, security, and comfort.
At the same time, government home improvement loans are typically offered by local authorities. This means that offerings change per location.
Most are restricted to people who intend to live in a space for some time. Others have restrictions on what you can use the loan for.
For example, if you want a loan for an office extension, a government loan may not be the best source. On the other hand, if you need a new bedroom to allow a family member to have private space – they might.
The important thing is that you check with local authorities and determine if you’re eligible and what you’re eligible for.
Government Loan Eligibility
Eligibility requirements vary from authority to authority. For example, the classic Home Improvement Loan does not have any requirements on income or savings. Instead, you’ll face restrictions like what you can use the money for and when you have to pay it back.
For example, you can normally use home improvement loans for:
- Heating and cooling
- Roof repair/replacement
- Safety and security measures
- Quality of living measures
- Accessibility (ramps, accessible showers, etc.)
Most also cover emergency repairs to utilities such as water and electrics or plumbing – for example, if the electrical wiring has become unsafe.
Some local authorities will restrict age, income, or will have benefits requirements. In addition, almost all have requirements that you repay the loan in full on the property changing hands.
How Much Can I Borrow?
In most of the UK, including England and Wales, the maximum amount you can borrow per self-contained home or flat is £35,000. Loans mostly have a minimum value of £1,000.
However, loans are not made where the loan value plus existing mortgage are more than 80% of the value of the property before the work is carried out. This means that you’ll have to look at the total value of your mortgage and property value to determine how much you can borrow.
For example, if your property is valued at £276,000, the total sum of your loan and your mortgage cannot exceed £220,800.
If you are low or have no income, that rate may fall. For example, many councils cap no-income loans at £15,000. Others will offer an entirely equity-based rather than income-based loan, meaning that the value of the loan depends on the value of the property, less any mortgages or existing loans, and not what you are earning.
Local Council Home Improvement Loans
Most council home improvement loans fall under the “Flexible Home Improvement Loans” category. These range from £1,000 to £35,000 per self-contained unit and are available to homeowners and landlords.
In addition, they require that you repay the loan in its entirety when the property is sold or within 5 years if you are letting the property out.
These loans are typically only subject to the availability of funding and homeowners/dwellers typically take priority. All of them are interest free.
However, while similar in value, these loans can vary quite a bit based on the work you are allowed to complete.
The following council authorities are examples. With close to 12,000 local authorities in the UK, we cannot list them all. However, many local authorities have home improvement loans, especially the ones on this list.
- Repair or improvement of single homes
- Renovation of empty property
- Conversion of empty non-residential properties into units of residence
- Replace electrical wiring
- A new heating system
- Repair/replace roof
- Fit new doors and windows
Furthermore, you must be unable to borrow from a bank or building officer.
In addition, the loan is offered through the council and requires that you have an HM Land Registry with a restrictive charge against the property until the loan is repaid in full. You must repay the loan in full when the property changes hands.
The Leeds Home Improvement Assistance Loan splits its loan into two categories.
The first is available to anyone and caps out at £35,000. The second is capped at £15,000 but does not have monthly repayments, and must only be repaid when the home changes hands. It is only available to those with low or no income and/or receiving benefits.
- Carry out essential repairs
- Ensure the home is warm and comfortable
- Improve home security
Buckinghamshire only offers home improvement loans to those who are 60 or older. The loan fund is offered through the Bank of England and as such has an interest rate of 3.5% to 7%.
Furthermore, the loan is not means-based, meaning you may have no income to qualify. However, it also has no monthly payments and you may choose to pay the loan off in your own time.
The loan must be paid in full at any point when the home changes hands, including on the death of the owner.
- Replace or repair roofing
- Fitting new windows
- Replacing old boiler
- Accessibility measures such as a walk-in shower, stairlift, etc.
- Safety measures such as alarms
- Repairs or adaptions for energy-efficiency or security reasons
Wales offers home improvement loans through its local authorities as well. These are up to £35,000 and have an administration fee of up to 15%.
In addition, each local council has its own eligibility criteria.
The Scotland Home Energy Loan offers assistance loans for insulation, gas connection, and glazing improvements. This offers a minimum of £1,000 with a maximum of £15,0000.
In addition, you can get a maximum cashback of £6,000, which can greatly reduce your total costs without having to pay back the loan. For example, if you install new glazing, a boiler, and insulation, the loan can include £15,000 towards costs plus £6,000 cash back towards the project, for a total of £21,000 of assistance.
HUG and HEEPS
Depending on whether you’re in England or Scotland, you can apply for a HUG or HEEPS grant to help with improving heating in your home.
This is delivered through installers, local authorities, and energy companies. Therefore, you’ll have to check local availability and offerings.
HUG and HEEPS are available for boilers, biomass heating, insulation, and similar improvements.
Government Home Improvement Loan Alternatives
If you don’t qualify for a Home Improvement Loan or would like to choose a grant instead, there are plenty of options across the UK.
However, restrictions are normally stricter, meaning you’re less able to qualify for grants than for loans.
The Green Deal Home Energy Scheme/Energy Company Obligation
ECO and Green Deal allow you to request grants to help with heating, cooling, insulation, etc. For ECO, you typically need a Pension Credit Guarantee or Savings Credit, Housing Benefit, or Universal Credit. However, Green Deal normally does not have restrictions.
In each case, you can get small-scale assistance with boilers, insulation, fuel assistance, new metres, and other energy-related upgrades.
Disabled Facilities Grant (DGF)
The Disabled Facilities Grant is a grant (not a loan) provided by local authorities to:
- Facilitate access to/from the home
- Make the home safe for dwellers
- Facilitate access to main rooms and sleeping rooms
- Provide accessible washing facilities
- Create accessible kitchen and eating areas
- Improve heating systems
- Facilitate safe access to/from a garden
These grants are only available to individuals who live in a property as their only/primary home for a minimum of five years after the works are completed. Local authorities also have full control over whether grants are given based on how necessary the works are.
The maximum amount of this grant is £30,000.
Housing Renewal Assistance
Housing Renewal Assistance policies are maintained by most (but not all) local authorities. These may be used for any repairs, improvements, adaptations, rebuilding, or securing projects – at the discretion of the local authority.
Unfortunately, every local authority has different conditions, application requirements, and maximum grants, so you’ll have to check with your local council to get an idea of what’s available.
Home Improvement Agency Loan
Most local authorities have not-for-profit organisations offering support to older and vulnerable people. These can offer very different services and normally provide services rather than direct money. However, they may offer grants, loans, minor repairs, general contractors, and materials.
Often, they require that you meet a statement of need.
Environmental health can provide grants or loans to help ensure the safety of a home because of:
- Excess heat or cold
- Pollutants such as asbestos, carbon monoxide, or lead
- Lack of security
- Poor hygiene (water, sanitation)
- Risk of accidents (Fire, electric shocks, falls)
- Potential for structural issues, collisions, or explosions
These grants are not limited in value, but vary in availability, and require a needs assessment.
The Social Fund
Social services can offer up to £1,000 to help with minor adaptations that assist with daily living for the elderly or disabled. This typically includes equipment, accessibility ramps, etc.
If you’re on means tested benefits, you can also apply for a Social Fund loan for minor home improvements. Here, if you receive Universal Credit, this is a “budgeting loan”, meaning it’s taken out of payments you would receive in the future.
If you have another benefit, it’s a “budgeting loan” and you’ll be expected to pay it in your own time. You can apply at the Jobcentre Plus Office in your area.
You can often seek out charities to help with home improvements and renovations.
Turn2Us is the leading UK charity helping people to find benefits, charities, and grants that they qualify for.
Using Your Home as Capital
If you don’t qualify for a loan or a grant, you may be able to use your home as capital for a loan. Here, it’s important to discuss your options with a bank and to ensure that you have the capacity to pay back the loan – so that you don’t put your home at risk.
These are always private loans and not offered by the government.
Support for Mortgage Interest
If you receive means-tested benefits such as Pension-credit, Universal-credit, or income-related Employment and Support Allowance, you can request financial help towards interest payments on a loan taken out for:
- Adapting a home for disability access
- Provision of bath/shower/sink/water-closet
- Fitting natural light, insulation, electric lighting, sockets, drainage, or damp proofing
- Facilities to prepare and cook food
- Refuse storage areas
- Provision of new bedrooms
- Heating system repairs/installation
- Home repairs
Essentially, if you received a government loan in the past, you can get support for the interest and mortgage payments.
Northern Ireland does not offer home improvement loans. Instead, you can apply for:
- Mandatory Repair and Grants Scheme (If you’ve received a Statutory Repair Notice)
- Mandatory Disabled Facilities Grant Scheme (If you have to adapt your home for accessibility)
- Repairs, Renovations, and Replacement Grant (If your home is unfit to live in and you meet income requirements)
Saving Money On Home Improvements
In most cases, saving money on home improvements can allow you to do more work with your loan – reducing the amount you have to borrow.
Doing so means planning your repairs or work and choosing the right sources for home improvement.
- Seek out Home Improvement Agency help. Many local agencies offer builders, handymen, and repairmen as well as materials in lieu of money. This can help you to reduce the brunt of work to be done – such as having a boiler installed for just the cost of the boiler.
- Plan renovations to align with each other. In most cases, it costs less to have everything done at once than to plan projects out in stages. While the latter approach costs less upfront, it means paying more notification fees, inspection fees, more travel costs, etc. Because those fees can be over £1,000 per project, breaking repairs into stages can be a costly endeavour.
- Compare local handymen and choose one that offers a good deal. Getting good quotes and comparing offerings is key to understanding what local rates should be to ensure you’re getting a good rate.
- Request grants. Millions of UK homeowners qualify for grants for boilers, insulation, and other repairs. There are plenty of local authorities that can help you figure out what you qualify for and how to get it.
How Does My Low Credit Score Affect Me?
Most Home Improvement Loans are not based on income but rather on equity. This means that you’ll be able to take out a home improvement loan from the government regardless of a credit score.
However, some local authorities deliver home improvement loans through local banks, such as the Bank of England. This may mean that you do not qualify. In addition, it may mean that you pay a higher rate of interest, because you represent a higher risk investment.
No Income Status
If you have no income, it may not affect your Home Improvement Loan. However, it may.
For example, some local authorities will reduce the total value of the loan. On the other hand, most will grant the loan based on home equity. If you don’t pay the loan off during your lifetime, it will be paid from the value of the home at the time of sale or changing hands.
However, it’s important to keep in mind that this will mean that if you’re leaving a home to your children, they will be forced to repay a home equity loan before taking possession of the home.
Otherwise, you should be able to qualify for up to £35,000 in home improvement loans without income, providing you own the home.