Britainís homeowners have spent on average £1,509.10 each on employing tradespeople to work on their home over the past 12 months, research from MoneyExpert.com* shows.
The independent financial comparison website says that many people fund their home improvements with personal loans, and warns that the big spenders could be wasting as much as £2,500 if they pay for the work in this way.
MoneyExpert.comís research reveals that home improvements and alterations still force many people to spend big ñ some 1.2 million homeowners have spent at least £10,000 on their properties in the past year. Some 2.4m homeowners ñ around one in twelve (8 per cent) ñ forked out over £5,000 to fix problems or renovate their properties, and almost a quarter (22 per cent) spent between £500 and £3,000 employing tradespeople this year.
With many people turning to unsecured loans to finance major changes to their homes, MoneyExpert.com is warning homeowners to pick their loan carefully.
On a loan of £10,000 over four years, the total repayment could currently vary by as much as £2,501.76 ñ or by around £52 per month.
Sean Gardner, Chief Executive of MoneyExpert.com, said: ìHome improvements are one of the most popular reasons for taking out a personal loan. But when people go for major renovations and consider borrowing more than £10,000, they need to ensure they get good value for money.
ìPersonal loans can vary in price dramatically ñ you could end up paying back as much as a quarter of the amount you borrowed in extra repayments unless you research the market carefully.
ìOf course, there are other considerations such as early redemption fees and minimum income requirements ñ taking out a personal loan should not be a snap decision.”
Londoners spent most on home improvements this year, with an average layout of £1,840.90. However, Scotland and the Midlands werenít far behind, spending on average £1,730.69 and £1816.25 respectively.
Region Average spent on employing tradespeople to work on their homes in last 12 months
- London £1,840.90
- Midlands & Wales £1,816.25
- Scotland £1,730.69
- South £1,276.85
- North £1,084.84
MoneyExpert.com analysis** shows that the average APR on personal loans of £10,000 is around 7.39 per cent, with the lowest rate currently offered by Moneyback Bank at 5.6 per cent. However some 31 per cent of personal loans charge more than 7.5 per cent, with nine products breaking the 8 per cent barrier.
Lenders offering competitive rates on loans of £10,000 include: Moneyback Bank (5.6 per cent), Masterloan (5.7 per cent), Abbey (5.8 per cent) and Northern Rock (5.9 per cent)***.
*YouGov interviewed 2,745 GB adults (18+) between 9th and 14th November 2006
** MoneyExpert.com analysis of Defaqtoís Aequos Database 21.11.06
*** Product details:
Moneyback Bank personal loan: 5.6% APR typical is rate for online Moneyback Bank loan applications for new and existing customers. Past credit history and other personal details will be reviewed and the actual rate offered may be higher depending on circumstances.
Masterloan: 5.7% APR typical. Masterloan is brought to you by Barclaycard. To apply, you must be 18 or over and a UK resident. Rates may vary according to a combination of factors which are considered to set a personal loan rate for you including past credit repayment history, your past account history and other personal details.
Abbeyís Abbeyloan (internet): 5.8% APR typical on all internet loans from £1,000 to £25,000. To apply for this loan you need to be a UK resident aged over 18. You’ll also need to have a regular income and show that you’ve managed your finances without any problems in the past. Northern Rock unsecured personal loan: low rate 5.9%. Borrow any amount from £1,000 to £25,000; spread your repayments over one to ten years. Interest rate on unsecured loan is fixed. With express service option the loan can be in a bank account ready to use the same day the company receives the fully completed documents.