In the past house price increases meant that many people who wanted to borrow money to pay for home improvements could easily release equity from their homes, which they could use to pay for an extension, new kitchen, loft conversion or a conservatory.
The 2008 credit crunch has put an end to that, as house prices first dropped, and are now sitting relatively still, and lenders have become more stringent with their lending, as a result of the irresponsible lending that caused the credit crunch in the first place.
Homeowners were able to borrow more money against their home, in some cases more than the house was worth, releasing money from their home in the process which they could use for various home improvements.
Homeowners will now be hard pressed to find a loan for more than 90% of their homes value, and the cost of higher LTV loans is higher on a monthly basis.
As a result, less homeowners have been able to afford home improvements as a result, and the construction industry has felt a knock on effect.
As the housing market has become more and more stagnant, families with houses they have outgrown have been unable to move, and they have started to turn to secured loans for the extensions they so badly need.
A secured loan is secured against the equity the homeowner has in their home, but is a cost effective way of borrowing a large sum of money over a long period.
A customer could borrow £10,000 over 10 years to pay for an extension on their home, which will usually increase the houses value in the process.
Whilst the homeowner puts themselves at risk of losing their home if they fail to keep up their repayments, in reality most customers will always meet their repayments, and will be able to pay for that home improvement after all.
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