How to use a HELOC to fund outdoor home improvements

Home renovations don’t only include improvements inside the home, such as an extension or a brand-new kitchen. There are plenty of ways to renovate your home outdoors too. For example, you might landscape your garden, install a swimming pool or build a home office in your garden.

The good news is that many of these outdoor home improvements will add significant value to your property. The downside is that you’ll need to work out how you’re going to pay for these costly renovations. 

How to pay for outdoor home renovations

Depending on the extent of your outdoor home improvements, you could be looking to spend thousands, if not tens of thousands of pounds. If that’s the case, it’s likely you’ll want to borrow money to cover the cost. 

One option is to use a traditional borrowing method such as a personal loan. With this type of loan, you borrow a fixed sum of money – usually between £1,000 and £25,000 – and then repay it in fixed monthly payments over a term of between one and seven years. Paying off your loan before then could trigger an early repayment charge.

Alternatively, you might want to remortgage to release some of the equity built up in your home, and add the amount you want to release to your new mortgage. The downside of this, however, is that you may have to pay an early repayment charge or exit fee if you’re leaving your existing mortgage deal before the end of the term. Plus, there may be new mortgage arrangement fees to pay on top. 

Using a HELOC as an alternative option

A third option you might not have considered is a home equity line of credit, or HELOC. This could provide a much more flexible way to borrow. 

A HELOC enables you to borrow against the equity that you’ve built up in your home and receive the funds as a line of credit, rather than as a lump sum. At Selina Advance you can borrow between £10,000 and £250,000, making it a good option to consider for larger outdoor home improvement projects.

You can then draw on your line of credit as required, up to your agreed limit. This can make it less stressful if your project runs over budget as you can simply draw the additional funds from your HELOC.

Alternatively, if your project costs less than originally anticipated, you won’t pay interest on the amount you haven’t touched. 

Repaying your HELOC

At Selina Advance, you will have a year ‘flexible’ period in which you can draw on your funds, repay them and redraw. After 5 years, the facility switches to a standard term loan allowing you to pay the balance over a longer period of time. However, should you wish to repay the loan earlier, you can do so without paying any early repayment charges (ERCs). 

There is only a one-off product fee of £1,395 with the Selina Advance HELOC and in most cases no valuation fee. 

Further benefits of using a HELOC include that your monthly repayments are flexible and you can choose to repay your loan over a term of between five and 30 years. If your outdoor home renovations have been particularly costly, you might prefer to repay your loan over a longer term to keep your monthly payments down. But remember this means you will pay more interest overall. 

However, should you wish to repay your loan earlier than planned, you can do so without facing any early repayment penalties.