The term ‘home improvement loan' generally refer to lines of credit where a homeowner's home equity (the portion of the home loan that's been settled) serves as collateral against a further loan amount being made accessible to them. Perhaps somewhat euphemistically referred to as “home improvement loans”, these are essentially just second bonds or ‘further home loans'.

Who choose a home improvement loan?

Although home improvement loans exist primarily to facilitate home improvements – either structural or cosmetic – they also tend to be used to fund children's educations or less noble things such as family holidays.

The original thinking, however, is that home improvement loans serve to increase the overall value of a property, effectively making it a sound investment, rather than a lifestyle-oriented expense. This inevitably means that the increased value of the property cannot be realised without selling it.

Another consideration is that the outstanding value of a home improvement loan is subject to interest charges, which will also need to be deducted from the increase in asset value when the net profit is calculated upon selling the property.

More information on home improvement loans to follow soon.