Home Renovations

Time for spring cleaning, or a little DIY? Spring is the time for new beginnings; mending that leaky pipe; decorating the upstairs bathroom; buying new curtains for the lounge; or getting a new bed at the request of your aching back.

However, how do you go about paying for it all? It’s not as if money grows on trees and with the UK being one of the last major global economies to emerge from recession, the family purse strings are still pulled tight.

There are ways to make the updates and modifications you want without waiting until next spring however. Despite the UK’s growing personal debt, and putting aside for one minute the fact that debt is largely the reason we are in such as mess, loans could be a way of getting us out of the economic quagmire.

The current interest rate set by the Bank of England is at an all-time low of just 0.5%. This was done on purpose; one reason was to help mortgage lenders as too many people were defaulting on payments last year; but also to encourage us to spend. How can a low interest rate get us to spend I hear you ask? Well it means that we can get loans and credit at better rates than if the BoE rate was higher, supposedly.

Spending is the best way to pull a country back from recession. Pumping money into the economy via printing more money just leads to inflation, which is already on the rise in the UK and currently stands at 3.4% – well over the 2% target. However, getting us, the consumers, to put our money back into the economy instead of savings accounts – which, if we are honest is what feels safer – boosts small companies, local communities and the economic cogs begin to turn.

What’s more, the UK’s economy is more directly linked to house prices than almost anywhere else in the world, so if we start to buy property again, the economy will smile back at us.

However, banks, being banks, don’t want to risk losing any money. So getting a loan in 2010 is proving to be increasingly tricky. Most mortgage lenders for example are asking for at least 25% to get their best rates and unsecured personal loan rates are well above what they should be considering the base rate is just 0.5%.

In 2007, the Bank of England base rate peaked at 5.75% but personal loan rates were on average 8.8%. Now however, with just 0.5% as the base rate, the average personal loan rate is 12.9%. This is because of risk and uncertainty. But one bank does have a 2007 worthy rate. Santander offer personal loans with just 8.9% APR on loans of £7,500 to £14,950. This smashes the competition out of the water.