How to afford your home renovation
Financing a home renovation or extension can be a challenge, and it’s frustrating when you see neighbours having the work done that you’ve so desperately been saving for for years. I know I’ve been there!
Most people save up for weeks or even months to get enough money for a single renovation, and many people actually remortgage their house to take the equity out to pay for the renovation.
If you want to make significant changes to your home, there are a few ways you could afford it. I’ve gone through the main ones below but also take into account that I’m no financial expert! I’ve just done the research for you to demonstrate exactly how you can create the house of your dreams.
Is a renovation right for me?
Undertaking a renovation isn’t a small job, and before you spend all your savings or remortgage your house, you need to be sure that you’re doing it for the right reasons. Ask yourself these questions before you start:
- Do I have any concerns about the structure of the property?
- Are standard repairs going to be sufficient?
- Do I need to make any structural changes?
- Will completing a full renovation increase the value of the property?
If you answered yes to any of these questions, then you should go ahead and start planning your renovation!
If your answer to these questions is no, then your issues can probably be resolved by standard repairs and maintenance work rather than a total property renovation
How to fund a house renovation
Use your savings
Home renovations can be pretty pricey, and that’s why people often squirrel away a good amount of money just to cover the cost. So why not let your savings do a bit of the heavy lifting?
Depending on how much you’ve saved, your savings account might chip in for the whole job, or at least soften the blow. Even using part of it helps preserve more of your salary or borrowing capacity.
The beauty of a savings account isn’t just about having funds when you need them. If your home reno counts as a “need” (and honestly, it usually does), there’s absolutely no shame in dipping into that pot you’ve built up. In fact, you can be smart about it and still get a little bonus on top.
Here’s how to make your savings go further.
Go for higher-rate accounts:
- Regular Savings: Principality Building Society is offering a whopping 7.5% AER for six months if you deposit up to £200 per month
- Easy-Access Savings: Want flexibility without sacrificing much interest? Chase currently offers 4.75%, while Cahoot (part of Santander) pays 4.55%
- Cash ISAs: These are fantastic for tax-free interest. Top deals include Chip’s Instant Cash ISA at 4.7%, Tembo at 4.64%, and Moneybox at 4.45%—all safe, FSCS-protected, and keep your savings tax-free
- 1-Year Fixed Bonds: If you can lock your funds away for a year, Atom Bank is currently offering 4.42% AER, plus several other solid offers in the 4.3–4.35% range
Use a combination approach:
- Park your lump sum into a high-rate easy-access or ISA
- Put spare pennies into a regular savings account each month to earn that juicy 7.5%.
- Consider laddering fixed-rate bonds, as this can help you balance accessibility with better yields.
Stay on top of things:
- Banks shift rates when the Bank of England changes the base rate, like that recent dip from 4.25% to 4% on 7 August 2025
- A handful of banks, including Santander and Co-operative, have already trimmed their savings rates this month, so check back now and then for better deals
- Inflation is hovering around 3.5 to 4%, so anything above that helps your money actually grow, not just tread water
Be mindful of tax
- Your Personal Savings Allowance lets basic-rate taxpayers earn up to £1,000 in interest tax-free each year (just £500 if you’re a higher-rate taxpayer), while additional-rate taxpayers get none
- Using Cash ISAs helps sidestep this entirely, as interest there is always tax-free.
Remortgage your home
If your savings alone aren’t enough to cover your renovation, remortgaging can be a smart way to fund your home improvements. Essentially, you’re replacing your current mortgage with a new one, often with a higher balance, so you can release some of the equity you’ve built up in your property.
Here’s what to consider:
How much can you borrow?
Lenders usually allow you to borrow up to 75 to 90% of your home’s current value, depending on your credit and income. The difference between your outstanding mortgage and this limit is the amount you could potentially release for your renovation.
Interest rates matter
Remortgaging rates can be lower than personal loans or credit cards, making it a cost-effective way to fund larger projects. However, even a small increase in your mortgage rate can add up over time, so make sure to compare deals carefully.
Fees and costs
There may be arrangement fees, valuation fees, or early repayment charges on your existing mortgage. Factor these into your calculations to ensure remortgaging actually saves you money.
The long-term impact
Increasing your mortgage will raise your monthly repayments unless you extend the term. Consider how this fits with your budget and future plans.
Before you remortgage, I’d advise that you speak to a mortgage broker who can help you find the most competitive deal and guide you through the process.
Only borrow what you genuinely need for the renovation, don’t let the lure of extra funds tempt you into unnecessary debt, and keep in mind that the improvements you make can increase your property’s value, potentially offsetting the cost in the long run.
Remortgaging can turn your home into a tool to fund your dream renovation—but it’s not a decision to take lightly. Careful planning and realistic budgeting are key to making it work for you.
Take out a loan
There aren’t many situations where it’s acceptable to take out a loan for the sake of a renovation.
However, if you require an urgent renovation, then it does warrant the need for emergency funds. In this case, it’s perfectly acceptable to take out a loan (assuming you can pay for it before the interest piles on) for the sake of a home renovation.
If you’re dealing with bad credit history, you can take out adverse credit loans to help you pay for the renovation. In short, only consider taking out a loan if you need to fix something urgently.
Don’t rely on loans as a means to pay for a renovation that you want for the sake of luxury.
For more information on bridging loans and property renovation, take a look at this guide from ABC Finance.
Do it yourself
Although this isn’t a way to fund a home renovation, it’s a much cheaper way to get the job done. You don’t need to spend money on professional services all the time. Occasionally, you require someone with experience. It’s absolutely recommended to use a professional for some aspects like wiring or electric. But you can save a lot of money if done correctly.
If you want to save money and learn how to repair and maintain different parts of your home, then DIY training is perhaps the easiest way to do so.
You learn from your mistakes more than a book, so hands-on experience is always appreciated. As long as you have someone supervising or at least monitoring what you’re doing, you’ll find that it’s incredibly easy to get DIY work done as long as you put your mind to it.
How to manage the cost of a property renovation
Whether you are taking on a property renovation because you want the challenge or you’re doing it because your property is in dire need of a refresh, managing the costs can be daunting.
The good news, though, is if you’re clever when sourcing contractors and materials, you don’t have to break the bank.
Set a realistic time limit for the renovation
You probably want your property to be fully renovated as quickly as possible, but unfortunately, it usually takes longer than you wish it to. Don’t rush things; you want your property to be finished to the highest standard, and good things take time!
I always say, whatever your estimated timeline is, add at least 10% extra time on top, if not 20%. This will be more realistic and then you won’t start panicking when things take longer than expected.
Make a note of every potential cost
Unexpected costs are almost guaranteed when completing a property renovation, but you can be a lot more prepared with some extra planning and thought
It’s impossible to track how much you’ve spent if you don’t make a note of your costs. For this reason, you should keep all important documents safe and have an organised way of keeping on track. You should have documents that follow contractors involved in the project. This includes decorators, builders and plumbers.
Alternatively, you could outsource the whole project and your provider will keep track of all costs.
Undertake the property renovation in one go
Outsourcing your entire project and paying for it in one chunk may seem like the more costly option. Still, it can be wise to undertake the whole project simultaneously, especially if you’re a landlord or business owner seeking a renovation.
When your building is usually occupied and repairs disturb staff or occupants, you want your works to be completed swiftly to minimise disruption. Hiring contractors for a week straight and getting the job finished promptly can be more cost-effective than spreading tasks over a long period.
Get thrifty and shop secondhand!
All the little bits and pieces along the way add up and amount to high costs.
Shopping secondhand is a fantastic way to save money while still picking up high-quality materials for your renovation.
Let’s take your bathroom suite; it’s an expensive room to refurbish, so search for some second-hand pieces, and you could save hundreds, even thousands!
You should also consider selling anything you take out of your property. Selling an old kitchen is a great idea, even if you only get a couple of hundred pounds for it. Your items get a new lease of life in somebody else’s home, and you have some extra cash to put towards that new bathroom suite! Plus, recycling is always good for the environment.
Shop around for the best prices
Completing your property renovation at the best available price comes down to where you source your materials and contractors. Never settle for the first contractors you consult. Ask around for recommendations, call up different suppliers and get a few quotes before you make any decisions, from sourcing your new tiles to finding a plasterer.
