Low rate or short term?
Adding renovation costs to your mortgage often means a lower rate, but over a much longer term. A shorter personal loan may have a higher rate but cost less interest in total.
Interest is worked out each month on the balance you still owe, at one twelfth of the annual rate. Early payments are mostly interest; as the balance falls, more of each payment repays the loan.
Worked example
A £15,000 loan at 8% over 5 years costs £3,248.75 in interest. Adding the same £15,000 to a mortgage at 5% over 25 years costs only £87.69 a month, but £11,306.55 in interest.
Paying less interest
Get quotes for the work first so you borrow only what you need, and compare total interest, not just monthly payments.
Inputs for the home renovation loan interest rate calculator
Amount to borrow
How much you need for the work.
Interest rate (per year)
The annual interest rate on your loan. The rate shown is only an example, so enter the rate from your quote.
Term
How many years you'll repay over. A longer term means paying interest for longer.
CALCULATOR QUESTIONS
Home renovation loan interest rate calculator questions
Is it cheaper to add renovations to my mortgage?
The rate may be lower, but over a long term you can pay much more interest, as the example shows.
How much interest is on a £15,000 renovation loan?
At 8% over 5 years, £3,248.75. Enter your own figures above.
Why do I pay more interest at the start?
Interest is charged on the balance you owe, which is highest at the start. As you repay, the balance falls and so does the interest.
What's the difference between the interest rate and the APR?
The interest rate is what's charged on the balance. The APR also includes most compulsory fees, so it's better for comparing the overall cost of different loans.