Home improvement loans: Build your dream home in South Africa
If you’re a homeowner, you’re probably familiar with the many renovations and improvements that need to be done to keep the house in the best shape. This can be a major drain on your bank account.
Sometimes, you might not even have enough savings to cover these projects. Yet, making major or minor improvements to your home is a responsibility that can’t be ignored – not for long anyway. If your home is in bad shape, don’t delay the upgrade. Learn about home improvement loans and make your application today.
What is a home improvement loan, and how does it work?
A home improvement loan is a personal loan that you use for the specific purpose of renovating and repairing your house. The loan is unsecured. That means you don’t need to use your house or any other asset to guarantee the loan. The amount you borrow is dependent on the project itself as well as the lender. However, as is usual, the loan is paid back in monthly instalments over a repayment period that ranges from 1 year up to 5 years on average.
Uses of home improvement loans
Once you receive your loan, you can use the funds for the following home-related expenses:
- Paying contractors/labour costs;
- Buying home improvement supplies and equipment;
- Replacing tiles, ceilings, or carpet;
- Fixing or upgrading plumbing or piping;
- Improving the roofing;
- Landscaping;
- Working on the electrical fixtures and wiring; and
- Bathroom and kitchen remodeling.
As you can see, this loan offers you a lump sum of cash that can be enough to cover most home improvement costs. Without this loan, you might have to come up with thousands of rands which is rarely affordable.
Advantages of home improvement loans
- They help you cover emergency repairs: Fixing a leaking roof, for example, is not something that can wait for long. This type of loan enables you to quickly cover those improvements that are considered absolutely essential.
- You can also improve your current living space: Some improvements might not be as crucial as others, but you can still upgrade your existing space to match better living standards.
- They help increase the value of your home: If you’re looking to sell or rent your home, making improvements means you can charge a higher price.
- Relatively low interest rates: Compared to other forms of financing such as credit cards, a home improvement loan is cheaper because of low interest rates.
- Flexible repayment terms: Generally, this type of loan allows for a longer loan term of up to 72 months (5 years). A long term gives you affordable instalments while a shorter term reduces interest costs. It’s up to you to decide which personal loan term works for you.
- Wide range of uses: You can use the funds to improve any area of your home – from the roof to the landscape.
How to choose the best home improvement loan in South Africa
Home renovation projects can have so many different details and requirements. Getting the right loan is simply a matter of finding out the answers to the following five questions:
- How much should I borrow? – This depends on how big your home renovation is. It would help if you got a good estimate of all the costs involved by asking your contractor or repairman for a quotation. This way, you can borrow the loan amount you need to cover all the costs. That means applying with a lender that can offer you the loan amount you need to complete your project. However, it’s still important to only take out a loan you can afford to pay back.
- How much can I pay back each month? – These monthly payments might have to continue for the long term. Therefore, it’s important to choose a monthly repayment that will fit smoothly into your budget.
- What will be the estimated total cost of the loan? – Looking at the APR of each loan gives you an idea of how expensive the loan is in terms of interest and other charges or fees. Low interest rate home improvement loans are always a better option.
- Do I qualify for the loan? – To get better rates and terms on your home improvement loan, one major requirement is having a good or excellent credit score. You’ll also be required to earn a regular monthly income.
- Does the loan offer better features? – Some South African lenders allow you to make early repayments on your loan at no extra cost. With other loans, you have the flexibility to choose between a variable interest rate and a fixed interest rate. Choose a loan with the best terms and conditions
How to apply for a home improvement loan in South Africa
We have conveniently showcased popular South African lenders and their loan options in our comparison tables above. Using the comparison process outlined above, you should be able to quickly settle on a loan offer that suits your home improvement needs.
At this stage, simply click the “Go to Site” button for that lender. Next, you will find yourself on the lender’s website where you can make a loan application by filling out a short online form and uploading some documents. However, before taking this step, please note that the following general requirements apply:
- Valid South African ID;
- Minimum 18 years;
- A good or excellent credit score/credit history;
- Proof of income (bank statements and payslips); and
- Proof of residence.
Find your monthly repayments with the home improvement loan repayment calculator
The home improvement calculator exists to help you compare what various South African lenders have to offer. When you choose your loan amount and loan term, the calculator quickly tells you your monthly payments. While you make your home a comfortable place to live in, paying back your loan should be a comfortable process as well. By using this loan calculator to come up with an affordable budget, you can tick all these boxes. For best results, use this free calculator as many times as necessary.
Are there other ways to fund home improvements?
If you wish to keep your choices open in terms of financing your home renovations, there are also other ways besides unsecured personal loans:
- Credit cards – Although credit cards typically have high interest rates, you can still draw the necessary funds for minor, low expense projects. Also, remember to pay off the credit card debt as quickly as you can to keep interest costs low.
- Home equity – If you have built equity in your home loan, this allows you to borrow the amount you have already paid back on your home loan.
- Cash-out refinance – You can replace your original home loan with a bigger loan. This new loan gives you more funds than what you owe for the home.
Commonly asked questions about home improvements
Is a home improvement loan a good idea?
A home improvement loan can be a good idea if you don’t have enough savings to fund the project. If you take out a low-interest home improvement loan, then it might be worth your while.
Are there home improvement loans for the blacklisted?
Yes. You might be able to find a home improvement loan for the blacklisted, but it’s usual to expect high interest rates. If you want lower rates, you might have to put up security to reduce the risk for the lender. For example, you might have to use your home as collateral.
How much do home improvement projects cost?
This varies from lender to lender. The best way is to get a quotation which estimates the totals cost of your particular project. That way, you can apply for a loan that covers everything without having to apply for a second loan later on.
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