How Do Home Renovation Loans Work?
The four real ways people borrow for a renovation, what each one actually costs, and why your insurer needs a phone call before anyone lifts a hammer.
Loan options compared
The right option mostly comes down to how much you need and whether you're willing to secure it against your home:
Unsecured
- No collateral needed
- Typically £25,000–£50,000 max
- Fastest to arrange
Secured to your home
- Home is collateral
- Up to £500,000
- Keeps your existing mortgage rate
Through your mortgage
- Often the lowest rate
- Fresh affordability check required
- Whole mortgage at risk if missed
How each option actually works
Unsecured personal loan
No collateral required, which is why it's the quickest and simplest option for smaller projects. It also comes with the highest rate of the four — Bank of England data from May 2026 puts a typical rate around 10.8% APR on a £5,000 loan, roughly double a typical mortgage rate. Borrowing limits are usually capped around £25,000–£50,000 depending on the lender and your credit profile.
Secured (homeowner) loan
Your home is used as collateral, which is what unlocks a much higher borrowing limit — up to £500,000 — usually at a lower rate than an unsecured loan. It's a separate agreement from your mortgage, so your existing mortgage rate and term stay untouched. The trade-off: your home is genuinely at risk if you fall behind on repayments.
Further advance
Extra borrowing from your existing mortgage lender, on top of what you already owe. It doesn't disturb your current mortgage deal, but you'll need to pass a fresh affordability check — it's possible to fail this even though your original mortgage was approved, especially if your circumstances have changed. Typically takes 2 to 4 weeks.
Remortgage
Renegotiating your whole mortgage to borrow more against your home's value. Popular for major projects that will significantly increase the property's value, since it can offer the most borrowing headroom — but your entire mortgage, not just the renovation portion, is exposed if repayments aren't kept up. Typically takes 4 to 8 weeks.
Comparing the options
| Option | Typical limit | Rate vs. mortgage | Processing time |
|---|---|---|---|
| Unsecured personal loan | £25,000–£50,000 | ~2x typical mortgage rate | Days |
| 0% credit card | Usually lower | 0% in intro period, high after | Days |
| Secured (homeowner) loan | Up to £500,000 | Lower than unsecured | 1–3 weeks |
| Further advance | Up to £500,000 | Close to your mortgage rate | 2–4 weeks |
| Remortgage | Up to £500,000 | Your new mortgage rate | 4–8 weeks |
Do I need to tell my insurer about renovation work?
Yes — every time, and before work starts, not after. Most insurers treat renovation or building work as a material change to the risk they're covering. This applies to structural and non-structural work alike — a new kitchen counts just as much as a loft conversion.
If something goes wrong during the work and your insurer wasn't told, they can reduce or refuse a claim, and in some cases treat the whole policy as invalid. It's a five-minute phone call, not paperwork to sort out later. If your standard policy doesn't cover renovation work, your insurer may offer an adjusted policy or point you toward dedicated renovation insurance for the duration of the project.
Financing your renovation properly
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1. Get real quotes first
Borrowing against a guess, then discovering the real cost is 30% higher, is one of the most common renovation mistakes. Quotes come before the loan application, not after.
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2. Decide savings vs. borrowing
Savings cost nothing in interest but empty your buffer. Most people use a mix rather than one or the other entirely.
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3. Compare loan types against your actual number
Under roughly £25,000, unsecured usually wins on speed and simplicity. Above that, secured options start looking more competitive on rate.
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4. Call your insurer before work starts
Not after the skip arrives. This is the step people forget, and the one with the worst consequences if skipped.
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5. Keep your contingency in cash, not credit
The 10% contingency every cost guide mentions is only useful if you can actually access it quickly when something's found behind a wall.
Local considerations for Leicestershire homeowners
Renovation costs in Leicestershire and the East Midlands generally sit at or below the UK national average, which means many local projects fall comfortably within unsecured personal loan territory rather than needing to go secured or remortgage. It's still worth checking the numbers properly rather than assuming — a loft conversion or full bathroom-and-kitchen job can easily clear £25,000–£50,000 even at Midlands pricing.
Working out your budget first? See our cost guides for home extensions, loft conversions, and bathroom renovations. Ready to get quotes? Get in touch for a free, no-obligation quote across Hinckley and Leicestershire.
Frequently asked questions
How do home renovation loans work?
Most home renovation borrowing falls into four routes: an unsecured personal loan, a secured (homeowner) loan against your property, a further advance from your existing mortgage lender, or a remortgage. Each has a different rate, borrowing limit, and processing time, so the right one depends mainly on how much you need to borrow and whether you're willing to secure it against your home.
What's the difference between a secured and unsecured renovation loan?
An unsecured personal loan doesn't use your home as collateral, but typically has a lower borrowing limit and a higher interest rate. A secured loan uses your home as collateral, allowing you to borrow considerably more, often up to £500,000, usually at a lower rate, but your home is at risk if you don't keep up repayments.
Is a further advance or a remortgage better for renovation costs?
A further advance is usually quicker (2 to 4 weeks) and doesn't disturb your existing mortgage deal, but you'll need to pass a fresh affordability check even if your original mortgage was approved. A remortgage takes longer (4 to 8 weeks) and renegotiates your whole mortgage, which can suit larger projects but means your entire loan is exposed if you miss payments.
Do I need to tell my home insurance company I'm renovating?
Yes. Most insurers treat renovation or building work as a material change to the risk they're covering, and this applies to structural and non-structural work alike. Not disclosing it can invalidate your policy or lead to a claim being reduced or refused if something goes wrong during the work.
What happens if I don't tell my insurer about renovation work?
If damage happens during the work and your insurer wasn't told renovation was taking place, they can refuse or reduce a claim, or in some cases treat the whole policy as invalid. It's a phone call before you start, not paperwork to do later.
How much can I borrow for a home renovation?
Unsecured personal loans typically go up to £25,000–£50,000 depending on the lender and your credit profile. Secured loans, further advances, and remortgages can go considerably higher, often up to £500,000, since they're backed by your property.
Know your budget yet?
Get a free, no-obligation quote first, so whichever way you finance it, you're borrowing against a real number, not a guess.
Get a free quote