Loans used to finance home improvements

Britons keen to add value to their houses are taking out secured loans on their home to make improvements, according to research.

A survey by the AA has shown that one in five people converted ‘dead space’ into living space, spending nearly £90 billion on making the improvements.

More than a quarter said that increasing the value of their home was the main reason for renovating their house, though 17 per cent admitted that they simply needed more space and could not afford to move to a bigger house.

On average, homeowners spent £10,300 turning previously unused space in their house into a living area.

Louise Cuming, head of mortgages at the moneysupermarket website, said: "It seems a large number of people are getting into debt to develop. No doubt, the thinking behind this is there will be a return on investment."

She added that people need to consider the effect on their monthly budget that taking out a remortgage or a loan will have before they start planning improvements.