Nationwide has doubled its maximum personal loan size to £50,000 after a rise in construction costs.
Four in 10 households are planning home improvements over the late May bank holiday weekend, according to the building society’s research, and it is one of the busiest times for the construction industry.
The society said it has increased the loan amount to help customers with rising costs and high inflation.
Construction prices are set to rise 15% over the next five years, according to the Building Cost Information Service, and 57% of households have already abandoned home improvement projects because of the higher costs.
The average price for a home extension is between £45,000 and £75,000, and 35% of those who borrow between £20,000 and £25,000 do so for home improvements, according to data from Nationwide. It also said the same percentage borrows this amount of money for new car purchases.
The increased loan amount is only available to Nationwide current account holders, and they can apply online, in a branch or over the phone. If they are eligible, they can receive the money on the same day, and there are no early repayment charges (ERCs). The loan can be used for anything the customer likes, not just for home improvement projects.
Competitive versus other loan providers
Loans of between £25,001 and £35,000 have a representative annual percentage rate (APR) of 7.9%, while for loans of between £35,001 and £50,000, it’s 8.9%. Yet the actual interest rate a customer is given will depend on things like their income and their credit history.
This is competitive when compared with other loan providers.
At First Direct, the interest rate is slightly lower. The representative APR is 6.4% for loans of between £25,001 and £35,000, at Sainsbury’s Bank it’s 7.8%, and NatWest and Royal Bank of Scotland both charge 7.9% – the same as Nationwide.
For loans of between £35,001 and £50,000, it’s 7.9% at First Direct, 7.8% at Sainsbury’s Bank, 8% at Barclays, and 9.9% at NatWest and Royal Bank of Scotland. Many of these loans, as with Nationwide, are for existing customers only.
Darren Bailey, head of personal loans at Nationwide, said: “With the impact of inflation and other external pressures, the costs of construction have seen significant increases in recent years. However, we recognise many people will want to continue with the home improvement plans, even if that means they have downscaled their plans to accommodate their budget.
“Our increased maximum personal loan size of £50,000 means we have an option to suit everyone. Whether you’re looking to fund home improvements, a new car or consolidate existing debts, we’ll be able to meet more of our customer’s borrowing needs.”
‘Materials and labour costs are expected to continue to rise’
Alastair Douglas, chief economic officer for Totally Money, said: “With the summer approaching, so is peak home improvement season. However, the cost-of-living crisis has driven up prices for everything from bread and water to bricks-and-mortar, meaning more people may be looking to borrow more money to cover the costs of their renovations.
“The increased maximum loan value from Nationwide may well prove attractive to homeowners, as materials and labour costs are expected to continue to rise over the next five years. And with fast payout, and no early settlement charges, customers will be able to access the money quickly, while feeling like they’re not locked in for the long term.
“When taking out any type of financial product, whether it’s a credit card, loan, or even making a purchase with buy now, pay later, ask yourself if you definitely need it, and if you can definitely afford it. Shop around, and always do your calculations to make sure you’ll be able to keep up, and check your eligibility to avoid being rejected. That way you can protect your credit file, and your long term financial future.”
