There are many different kinds of lending open to individuals that can suit their needs. Loans are also offered specifically for those who want to make home improvements such as large-scale work like complete renovation or simply buying a new kitchen. These are called home improvement loans and offer financing from a few thousand pound to hundreds of thousands.

Home improvement loans can be referred to as ‘secured' and ‘unsecured'. Loans are offered by banks, building societies loan companies and some supermarkets.

A secured loan is offered when assets are guaranteed to the lender in case the borrower defaults on their payments. Most individuals taking out a secured home improvement loan are homeowners because the usual asset offered is their property.

The risk is if borrowers stop paying back the loan they may lose their house. If a joint-owned house is the asset the lender may request the second owner to sign a waiver regarding repossession. This would mean if the loan repayments stopped the lender would have rights to the home not the co-owner.

Individuals can use their house as security for a home improvement loan even if they do not fully own it yet and are still paying off their mortgage. In this situation the loan company would be a ‘second charge' because they would be second inline to claim equity in the house should repayments cease. The ‘first charge' is the company who the individual is paying the mortgage to. When loan companies are the second charge they normally increase their interest rates because they are less likely to claim the majority of the security in the house.

When the lender is the second charge they often complete a valuation of the property on application of the loan. They investigate if there is substantial equity within the home to recover losses should the borrowers default on their payments.

Individuals can borrow a significant amount for their home improvements. These loans are often cited as being used for renovations, new buildings and simple redecoration. Consequently a secured home improvements loan can help with minor and significant alterations to residences. Some aim to purchase this kind of loan as an investment which adds value to their home though the calculated rise in value should be scrutinized alongside the cost of renovation.

Unsecured loans are also available to those seeking finance for home improvements. These do not have assets attached to them and if payments are discontinued then the loan company is likely to take legal action. They are usually offered to those with a high credit rating. However secured loans can be taken out even if the customer has a poor credit rating.

Unsecured loans are harder to obtain than secured loans because the lender has no guarantee of security. Additionally the interest rates are lower on secured loans than unsecured and more money is usually available for borrowing.

When considering a secured home improvement loan the borrower should calculate how much the work will cost and their ability to repay the loan. The terms and deal offered depend on factors such as the lenders, age, job, credit rating and assets. The repayment period depends on the amount borrowed. It can vary from several to twenty-five years. Some loans offer up to 125% of the value of an individual's house and this would normally be repaid over twenty-five years.

Borrowers are advised to make their repayments in the shortest time they can manage as this will ensure they pay as little interest as possible. Some loans allow individuals flexibility concerning their frequency of repayments. These are called Flexible Loans and attract higher interest rates.

As with the majority of loans borrowers repay the amount on a monthly basis over the term agreed. Charges can be made by the lender if the full amount is paid back early. If the loan is under £25,000 the borrower can cancel the loan within seven days. Borrowers may find that the loan has a ‘repayment holiday' which incorporates a set length of time where no repayments are made. Individuals may also have the option of payment protection on their loan. This helps to protect the asset offered if the borrower cannot pay the loan for various reasons.

It is wise to check interest rates and the detail of loans especially the annual percentage rate as a significant rise could have a considerable impact on the ability of borrowers to meet their monthly premiums. Additionally charges can be made by the lender if the full amount is paid back early.

There are many companies offering secured home improvement loans. These include banks, building societies, supermarkets, loan companies and independent brokers. They can be bought on the telephone or in person. Individuals can also obtain and search for secured home improvement loans on the Internet where many companies advertise them.