When the time comes to do work around the house, finding good deals on home improvement loans can be vitally important. Home improvement loans can be used to help you improve any part of your house or other real estate, providing you with the money to get the materials that you need and to hire the professionals that can get the job done.

Interest rates tend to be lower, since the improvements can actually raise the value of the real estate, and they can even include some of the external costs associated with building such as building permits and property taxes. Best of all, you don't need to supply any additional collateral... the improvements and the real estate serve as their own guarantee.

Equity is a key factor

When applying for home improvement loans, the equity of your house or real estate comes into play in a major way. Equity, if you aren't sure, is the amount of money that you have invested in the home or property... in other words, it's the portion of the house that you actually "own", and that isn't tied up in a mortgage or other loan.

If you have a mortgage for £100,000 on a home and have already paid £50,000 of it, then you have 50% equity in that home... or £50,000. This means that if you apply for a loan on that house, the equity that you have will be a major factor in determining how much you can borrow. The equity in the house serves as the collateral for the loan, and allows you to receive loans that you otherwise might not be eligible for.

Researching the project

Before applying for a home improvement loan, you need to gather some information. You're going to need to get the cost of supplies from at least 2 or 3 different outlets (such as building supply stores), as well as estimates from 2 or 3 contractors on how much the entire job will cost.

From there you need to start getting quotes from banks or finance companies, showing them the work that you plan on doing as well as the estimates for materials and labour. After receiving several loan quotes, look them over and see which one has the lowest interest rate with the best terms... this is the place you want to get your loan from. Once you've obtained your home improvement loan and started on your improvements, you need to start working on repaying what you've borrowed.

Not only does fast repayment prevent damage to your credit report, but it can also help to establish a good working relationship with a lender which can lead to lower rates and better terms down the road.