How To Finance A Loft Conversion – Lofty Aspirations
As you probably already know, loft conversions are an excellent way of adding value and space to your property. So you’ve decided you do want one, but the question is how to finance a loft conversion!
You’re probably excited thinking about creating a new bedroom, office, or playroom, in that unused space above your house. But of course everything comes with a price, and loft conversions certainly have their price!
Like any home improvement project, it comes with substantial costs. So let’s have a look at the different financing options for a loft conversion project in the UK.
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Understanding Loft Conversion Costs
Before we look up into the finance options, it’s probably important to understand the costs you’re likely to encounter during a loft conversion.
The Cost Breakdown
The cost of a loft conversion varies depending on several factors:
- The type of conversion: Different conversions come with different costs. For example, a dormer conversion costs upwards of £40,000 usually on average, while a Velux conversion costs somewhere around £20,000 plus. More complex conversions, like the Mansard style conversion, may cost £70,000 plus.
- Size and complexity: The larger and more complex the conversion, the higher the cost obviously. This includes factors like the size of the loft, the number of rooms you’re planning to add, and any special features like bathroom facilities.
- Location: Prices can also vary depending on where in the UK you live. For instance, costs are typically higher in London compared to other areas.
Remember it’s always advisable to get several quotes from different loft conversion companies, in order to get a ballpark figure for what it’s likely to cost.
How To Finance A Loft Conversion – Financing Options
There are several ways to finance a loft conversion. Here are some of the most common:
1. Savings
Naturally, using your savings can be the least expensive way to finance a loft conversion as it isn’t going to involve any interest charges.
However, not a lot of us have £40,000 sitting in the bank doing nothing, so that’s rarely an option for most people.
Even if you do happen to have the cash available, it’s always advisable to ensure that you have enough savings left for emergencies.
2. Unsecured Personal Loans
Unsecured personal loans are a pretty common way to finance smaller loft conversions. These loans don’t require any collateral, making them a less risky option.
However, the loan amount you can borrow may be smaller than other types of loans, and lenders may have stricter qualifying criteria.
So if you’re looking for a substantial loft conversion, like perhaps a mansard conversion; this type of loan probably will not suffice.
3. Secured Loans
Secured loans, also known as homeowner loans, allow you to borrow a larger amount of money by securing the loan against your property.
This can be an effective way to finance larger loft conversions. However, it’s important to remember that your property could be at risk if you fail to make repayments.
And please do not get into uncontrollable debt, in your pursuit of a beautiful loft conversion!
4. Remortgaging
Remortgaging basically involves taking out a new mortgage on your home to pay off your existing mortgage and then borrow additional funds for your loft conversion.
If this is the route you wish to go down, please speak to a mortgage advisor for better advice.
This may be a viable option, but only if there’s enough equity in your property. And do think hard before extending your mortgage term.
5. Credit Cards
Credit cards can be used for smaller expenses related to the loft conversion. However, it’s unlikely you would ever be able to borrow the kind of money required for a loft conversion. However it’s possible you could use a credit card to finance a bathroom you’re going to put in your loft for example.
Credit cards typically have higher interest rates and so are not the first option really when it comes to financing your loft conversion.
Interest Rates on Loft Conversion Loans
Interest rates on loft conversion loans can vary significantly depending on several factors, including:
- The type of loan you choose
- The lender you choose
- Your personal circumstances, such as your income and credit history
If you are going to take out a loan, then naturally it’s important to compare different loan offers to find the most affordable interest rate for your situation.
Applying for Loft Conversion Finance
The process of applying for loft conversion finance typically involves the following steps:
- Researching Lenders: Start by researching different lenders that offer loft conversion loans. Compare their interest rates and terms to find the best deal.
- Preparing Documentation: Gather all the necessary documentation, such as proof of income, bank statements, and details about your property.
- Submitting the Application: Complete the loan application form accurately and submit it to the chosen lender.
- Waiting for Approval: After submitting the application, the lender will review it and assess your eligibility. The approval process may take some time, so be patient.
Final Thoughts On Financing Your New Loft Conversion
Converting a loft is an excellent way to add value to your property and create additional living space.
Hopefully the above has given you some food for thought in how to finance a loft conversion.
However, always bear in mind it requires a significant initial investment. And that requires careful financial planning.
By understanding the costs involved and exploring in full, all your various financing options, you will be in a much better place to make a wise financial decision. One that suits your needs and your budget.
To reiterate what I have already said, before embarking on your loft conversion project, make sure you get several quotes from reputable loft conversion companies.
Also make sure you understand the building regulations, and take into consideration the impact on your property’s value.
In fact make sure that your conversion will actually realize a profit on your house if you come to sell it. You ideally want your loft conversion to ultimately pay for itself, and more!
It’s also crucial to keep your home insurance provider informed about any building work to ensure you’re adequately covered.
Note: The information I have provided in this guide is intended as a general overview of financial options. It is not intended to replace professional financial advice. It’s always recommended to seek professional advice before making any decisions about loft conversion finance.
