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When a home needs some maintenance work carried out, an ideal way to ensure this can be achieved is by arranging a remodeling program, providing you can raise the finance; one option is to apply for a home improvement loan to finance the project. Very few people want to attempt many of these home improvements themselves so tradesmen such as electricians, plumbers and carpenters will need to be employed.

Home improvement loans usually have the choice of a secured loan on the property itself or an unsecured loan where the home does not need to be used as equity. Fortunately loans that do not require the home itself as equity are even available to brand new homeowners. Fortunately for the homeowner, a non-equity based financing arrangement is available with a fifteen year repayment term if required.

There are, however county limits on how much money can be borrowed when it is for no equity finance and a lower limit imposed by the lenders which takes into account the joint income of both owners. The eligibility of the borrower, the property type and the improvements planned are all considered because this type of loan may only have minimal documentation and is relatively easy to process.

Home improvement loans which are secured against the property are just a way of releasing spare equity that the property has available. There are benefits to arranging a secured loan though as they generally have a lower rate of interest so reducing the monthly payments and although they are relatively hassle free, they are not another mortgage on the property.

Obviously the amount you are able to borrow using a secured loan will depend on the value of your home. The lenders need to be assured that there is in fact equity in your property and that any loans already outstanding will not interfere with any new arrangement made by them if they agree to a loan.

After this has taken place, the lenders will put a package forward which may not necessarily be for the full amount the homeowner wanted. Usually, finance companies will lend you a percentage of the assessed value of your house but some lenders can lend as high as 125 percent of your home’s equity.

An equity based loan can be risky if you arrange to lend an amount greater than you can comfortably afford so consider this carefully as you may end up handing your beautiful home over to your creditors. Home improvement loans can be a wonderful way to tidy up an aging home but remember that they need to be paid off and if you are likely to struggle, reduce the amount you want to borrow.

Last 5 posts by Rick Gomez

• Focus on the details when applying for a construction loan. - May 8th, 2008
• The truth about mortgages, construction loans and foreclosures - May 6th, 2008
• What is the difference between a mortgage and construction loan? - April 17th, 2008

Tags: Finance