9 Top Finance Options for Loft Conversions

Converting a loft is one of the best ways to maximise your living space and significantly increase your property's value. However, a loft conversion project can deplete you financially if you don't budget accordingly. Before you finalise plans and book your builders, it's important to consider different loft conversion finance options for a successful project. Depending on the loft conversion costs, there are many options to consider, including using savings, remortgaging, personal loans, or taking out a secured loan. We've compiled the top finance options for loft conversions to help you make an informed decision.

1. Mortgage / Remortgaging

One of the most popular ways to fund a property build or home improvement project is through a mortgage or remortgaging your home. You can easily borrow more against your property if you have equity built up to fund your loft extension project. Alternatively, remortgaging involves taking a second mortgage on your property. It allows you to acquire additional funds on top of your existing mortgage. You might be able to secure a lower interest rate from your mortgage lender, making your attic conversion more cost-effective over time. Different mortgage lenders have their eligibility criteria, ranging from the state of your current mortgage to personal circumstances. You also need to consider whether you need to pay any early redemption charges (ERCs) on your current mortgage before you decide to remortgage. It's important to remember that this is a long-term commitment and you'll be spreading the cost over a longer repayment period. Therefore, it's advisable to consult a mortgage expert to determine whether it would be a viable funding option for your building work.

2. Personal Savings

Using your savings is the most straightforward financing option to consider and can help you avoid debt. If you've set aside enough funds to cover the cost of the loft conversion project, paying upfront ensures you don't have to worry about any high interest rates. It will also spare you from worrying about repayment plans to keep track of later on. However, if your savings don't fully cover the cost to fully fund the house extension project, you might need to combine this option with others on this list.

3. Equity Release

Equity release varies depending on your home's value and it allows homeowners over 55 to access the cash tied up in their property without selling their home. You can fund different types of loft conversions through equity release. It's a great option if you want to have a home improvement project without taking on loans or using up savings. With equity release, as a homeowner, you can receive the funds as a lump sum or in smaller payments based on the value of your home. The loan is only repaid when you sell your house or pass away, making it a viable choice for those who prefer no monthly payments.

4. Loans

Taking a home improvement loan is another solution you can consider. You can opt for a secured loan where your property can be used as collateral or an unsecured loan without collateral. Depending on the selected option, your eligibility will vary depending on the value of your property and your credit history, among other factors.

4.1 Borrowing from Friends

If you have a close relationship with family or friends willing to lend you money, you can consider getting a loft conversion loan from them. It would be a cost-effective solution because you won't have to worry about higher interest rates. However, it's important to set clear repayment terms or have a promissory note to avoid misunderstandings and to retain trust.

4.2 Employer Loans

Certain employers provide low-interest or even interest-free loans as a part of their benefits package, designed to offer financial support to their employees. They can be a reliable funding source without high interest rates if you have a large project. You can use the loan amount to fund your loft space building project. It's worth reaching out to your human resources department or reviewing your company's employee benefits programme to see if this type of loan is an option for you.

5. Selling Unused Assets

Another great way to generate funds for your loft conversion in London is by selling any valuable items sitting around unused. Whether it's selling old cameras, mobile phones, clothes, or furniture, selling assets you have gathering dust can help you raise money without taking on extra debt. Online platforms like eBay, Facebook Marketplace, and Vinted are perfect for selling your items so you can boost your savings pot quickly.

6. Government Grants

In some cases, government grants may be available to help cover the cost of a loft conversion, especially if it's being done to improve energy efficiency or accessibility. These vary depending on your local authority, so check with them to see if you qualify for any home improvement grants and how much you can get towards your conversion.

7. Crowdfunding

Crowdfunding platforms like GoFundMe or Kickstarter could help you raise money for your loft conversion project if you have a unique or compelling story. However, for crowdfunding to be successful, you need to have a large network of friends, family, or followers willing to support and share your campaign.

Additionally, promoting your project publicly, creating engaging content, and regularly updating your backers to maintain momentum is crucial. With the right strategy, crowdfunding can be an effective way to gather the resources you need for your conversion, while also building a sense of community around your project.

8. Credit Cards

Credit cards are a great example of an unsecured personal loan that can be a convenient way to fund smaller aspects of your loft conversion. However, it's a financing option that you must approach with caution, as interest rates can be much higher than other forms of borrowing.

You might want to use credit cards for smaller items like fixtures, furnishings, or materials to keep the repayment costs down. If you choose credit cards to fund your project, you need to be confident you can afford at least the minimum repayments every month. Ideally, it would be better if you can afford more to clear the balance faster and avoid paying excess interest.

Another option is to choose a 0% interest money transfer. Some credit cards offer a 0% interest promotion on money transfers, allowing you to borrow money without incurring interest for a set period. Likewise, if you already have credit card debt, transferring it to a card with 0% interest for a certain period can help you save money while still paying for your loft conversion.

9. End of No Interest Promotion

Once the promotional period for your credit card ends, you might want to look into transferring the balance to another card with a 0% offer. While this can help you avoid interest, you must be aware of balance transfer fees to avoid falling into a cycle of debt.

A loft conversion can significantly enhance your home and has the potential to increase the value of the property if you choose to sell up in the future. However, financing it requires careful consideration of the various options available to find a solution that works for your needs and lifestyle. Whether you opt for a bigger mortgage, use your savings, or explore alternative routes like government grants, there's an approach to suit your financial situation. Weigh up the pros and cons of each option, and choose the one that best fits your needs and long-term financial goals.