Nationwide Building Society has announced a significant increase in its maximum personal loan limit, doubling it from £25,000 to £50,000. This move aims to assist customers in managing the financial strains caused by the ongoing cost of living crisis, particularly those looking to make necessary home improvements as construction costs rise.
The decision comes in response to growing economic pressures, with Nationwide stating that the increased loan amount will help “meet customers’ needs” at a time when many households are seeking ways to renovate or enhance their homes. The institution highlighted that the higher loan ceiling will be available to current account holders, who can apply online, in-branch, or by phone, and may even receive the funds on the same day.
One of the key advantages of Nationwide’s offering, compared to other lenders, is the absence of an early settlement charge. This means customers who wish to pay off their loan ahead of schedule can do so without facing extra fees, making it a more flexible and potentially cost-effective option for borrowers.
Nationwide conducted research which revealed that more than four in ten households are planning to undertake home improvement projects over the upcoming Bank Holiday weekend. This surge in demand comes at a time when construction costs are forecasted to rise by 15% over the next five years, according to the Building Cost Information Service (BCIS).
In its survey of 2,000 people, Nationwide found that nearly 10% of respondents are relying on personal loans to finance home improvement projects. The data suggests that a typical house extension now costs between £45,000 and £75,000, making larger loans more necessary for those undertaking substantial renovations.
Further analysis of Nationwide’s customer base shows that over a third of borrowers who take out loans between £20,000 and £25,000 do so to fund home improvement projects. This underscores the growing reliance on personal loans as a way for homeowners to finance renovations in the face of rising costs.
Darren Bailey, Nationwide’s Head of Personal Loans, commented on the impact of inflation and other external factors on construction prices, noting that these increases have made home improvement projects more expensive for many. He acknowledged that while some people may need to scale down their renovation plans to stay within budget, Nationwide’s increased loan limit offers greater flexibility to meet a variety of borrowing needs.
Bailey said, “With inflation and external pressures driving up construction costs in recent years, we understand that many customers are still determined to proceed with home improvements, even if they’ve had to adjust their plans. Our new maximum loan limit of £50,000 means we can provide an option for everyone, whether you’re funding renovations, purchasing a new car, or consolidating debts. We’re better positioned to meet the borrowing needs of our customers.”
Despite the benefits of increased loan amounts, financial experts urge caution. Anyone considering taking out a loan is advised to seek financial advice to determine whether borrowing is the right choice for their situation. It is important for individuals to assess their ability to repay loans in the current economic climate, which continues to be challenging for many.
Alastair Douglas, CEO of TotallyMoney, weighed in on how the cost of living crisis has affected British homeowners’ ability to invest in essential renovations. He noted that as summer approaches, many people are entering what is traditionally the peak season for home improvements. However, with inflation affecting the prices of basic goods as well as construction materials, more people are turning to loans to cover their renovation expenses.
Douglas stated, “With the summer season fast approaching, we typically see an increase in home improvement projects. However, the cost of living crisis has impacted everything from daily necessities to building materials, prompting more homeowners to borrow additional funds to complete their renovations.”
As the financial landscape continues to evolve, Nationwide’s decision to increase its loan limit provides a timely solution for those grappling with rising costs. However, potential borrowers should carefully consider the long-term implications of taking on additional debt and seek appropriate financial guidance before committing to a loan.