Homeowners Raid Savings And Rack Up Debt To Cover Home Repair Costs

Two-thirds of UK homeowners are dipping into savings or investments to pay for essential home repair costs – while almost a quarter are forced to borrow or use credit.

The survey of over 1,200 homeowners, commissioned by the Federation of Master Builders (FMB) and Homeowners Alliance, found 65% are using savings to fund vital repairs and upgrades, with more than a third (34%) of mortgage holders extending their borrowing even further to get the work done.

Two thirds of homeowners use savings to cover home repair costs

The findings expose the financial pressure on families tackling essential home improvements – not vanity projects, but work needed to keep their properties safe and habitable. More than a quarter (27%) are upgrading electrics, plumbing or heating systems, while 24% are fixing structural damage or disrepair.

Among mortgage holders, the strain is even greater:

· 14% increased their mortgage or remortgaged

· 10% turned to credit cards

· 9% used supplier financing

· 5% took out personal loans

The data from our research shows how two thirds of homeowners have dipped into the savings or investments to cover the cost of building work. The table below shows the percentage of homeowners who have used a builder and the different ways they have funded the work.

How building work is funded:

How Building Work Was Paid For	Total	Mortgage Holders	Own Outright
Savings/Investments	65%	61%	67%
Regular household income	24%	30%	21%
Net finance/credit/ borrowing	23%	34%	16%
Increased mortgage/ Remortgaging	8%	14%	4%
Credit Cards	7%	10%	5%
Finance through builder/ supplier	5%	9%	3%
Financial help from family	5%	8%	3%
Other borrowing (personal loan)	3%	5%	2%
Other	1%	0%	2%
Prefer not to say	2%	2%	1%
Don’t know/can’t recall	4%	2%	5%
Sample size	834	304	530

The costs and personal impact are significant if building work goes wrong

Speaking about their rogue builder victim experience, a mother from Scotland who cannot send her son to university now that they have forked out thousands to a rogue builder said:

“Due to a rogue builder leaving our home in a state of disrepair we have had to employ new contractors at significant financial and emotional cost to ourselves. The repercussions of this mean our child is unable to attend the university of his choice as funds that were allocated to their education that we have been saving for 18 years have had to be used to repair our home. The devastation caused by this rogue trader is immeasurable and will have lasting consequences on our lives. Licensing is an absolute must in the building trade to prevent this occurring with such regularity and with such heartbreaking consequences to clients.”

Just a quarter (24%) could afford to pay for building work from regular household income alone.

Brian Berry, CE of the FMB, added:

“Homeowners are stretching themselves financially to make their homes safe – raiding pension pots, maxing out credit cards, and piling on more mortgage debt. These aren’t luxury kitchen extensions. People are fixing dodgy electrics and crumbling walls because they have no choice.

“With 1 in 5 homeowners doing virtually no checks on a builder’s trading history or financial stability, they’re gambling with money they can’t afford to lose. When it goes wrong, families are left with unsafe work, empty bank accounts and nowhere to turn. Licensing small building companies has never been more important.”

Paula Higgins, CEO of the HOA concluded:

“Homeowners are doing the responsible thing by maintaining their properties, but many are stretching themselves financially amid rising mortgage costs, higher living expenses and stagnant wages. When people put this much on the line, the risk of being ripped off or left with substandard work becomes even more serious. Homeowners deserve better protection, and the government can deliver this by licensing builders.”

What is the best way to finance home repairs?

Renovations can be costly and finding the right way to finance your home repairs will depend on your situation. There are various options:

1. Use cash savings – if you’re forward thinking enough to have built up a rainy day fund, this is a good way to finance your home repairs. While you may lose out on any interest you may build up from your savings, you will be avoiding paying interest on any loans or your mortgage.
2. Remortgage to release funds – Using your mortgage for home improvements will usually offer the cheapest rates, but you will be subject to paying interest. You will need to prove you can afford the bigger mortgage and will need sufficient spare equity in the property to raise capital. It’s important to factor in any switching costs as well but many deals will offer a free valuation and free legal work for remortgages, which helps to cut set up fees.
3. Take out a secured homeowner loan – You may decide not to remortgage to fund home improvements if you already have a competitive mortgage deal or would face costly early repayment charges. In these situations, taking out a second mortgage could be a more cost-effective option – although these loans often come with higher interest rates.

For more detailed information on financing home improvements, read our guide on Financing Home Improvements to research your options.

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