In this brief guide, we are going to answer the question “how soon after buying a house can I get a home improvement loan?”.

How soon after buying a house can I get a home improvement loan?

If you are wondering how soon after buying a house you can get a home improvement loan then the first thing you should know is that there is no restriction on how soon or what timelines you must follow.

You will be able to get a home improvement loan immediately after you have got a mortgage but there are a few things you should consider.

These factors may affect how much you can borrow and the home improvement loan rates you may be able to obtain.

What are home improvement loans?

Home improvement loans are usually secured loans which you take to fund home improvements. Due to the fact that these loans are secured, they tend to be much cheaper than other forms of credit but defaulting on these loans could mean that you end up losing your home through a home repossession.

Your home improvement loan options may be limited

Due to the fact that you have a recent hard credit search on your credit profile, you may find it much harder to get a home improvement loan shortly after.

This is especially the case if you do not go through manual underwriting but rather go through automated decision underwriting which may reject you if they spot a recent hard credit search on your credit profile. 

You may, therefore, find it in your best interest to seek a home improvement loan lender who is willing to manually underwrite your application.

You should also look to take steps which increase your credit score in the meantime, these include:

  • Keep your credit utilization below 30%
  • Avoid missing credit repayments
  • Avoid making too many credit applications in a short time
  • Get a credit builder card or loan(such as Loqbox) to show good credit repayment behaviour
  • Avoid payday loans
  • Get on the electoral roll

You won’t be able to get a further advance on your mortgage for 6 months

Most mortgage lenders impose a 6-month limit in which you won’t be able to redeem your mortgage. This means you won’t be able to get a home improvement loan with the same lender if you wish to get a further advance. 

This also means that you won’t be able to settle your mortgage within 6 months.

On the other hand, if you wish to get a second charge home improvement loan on your property then you should have no issue doing this unless the original lender has some issues with this. 

The Equity in your home

As you have just purchased your home you may not have sufficient equity in your home but this is dependant on the size of the mortgage deposit you put down.

Secured home improvement loans will rely on the equity in your home as security and if you do not have sufficient security you may not be able to get a home improvement loan so soon after buying a house or ifyou are able tothen the home improvement loan rates may be high.

 You may instead need to wait for a few months or years until you have repaid sufficient capital towards your mortgage and now own more equity in the property.

If house prices rise, the equity you have in the property will also rise so you can wait for this to happen as well but in this case your guess is as good as anybody’s as to when property prices may rise.

Most mortgage lenders will have a minimum equity requirement before they approve a home improvement loan application.

Your debt to income ratio

As with mortgage applications, the home improvement loan lender will look at your debt to income ratio to be sure that you do not have too much debt. 

They will also check to see what your disposable income is and if you can afford the home improvement loan repayments as well as what your debt to income ration will including the home improvement loan repayments.

If you fall above their debt to income ratio cap then it is very unlikely they will offer you a home improvement loan.

Use a mortgage broker for your home improvement loan

You may want to consider using a mortgage broker to get your home improvement loan. 

Mortgage brokers will usually have access to a range of mortgage products and specialist home improvement loans from across the market. 

This means they may be able to serve you and advise you on what your options are when seeking a home improvement loan shortly after buying a house.

In this brief guide, we answered the question “how soon after buying a house can I get a home improvement loan?”.

If you have any questions or comments please let us know.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.