"Choosing how to finance a home improvement project is an important decision. The right approach can not only transform your living space but could also boost the value of your property"
- Ryan McGrath - Pepper Money
A rising number of UK homeowners are choosing to renovate rather than relocate, with new figures from Pepper Money showing a significant increase in the use of secured loans to finance home upgrades.
With mortgage rates remaining high, moving costs climbing, and housing stock limited, many households are adapting existing properties to suit evolving needs, with national search interest in “Home Improvement” rising by 19% in the last quarter, reaching over 76,000 searches in April 2025 alone.
Cities leading the home improvement shift
Pepper Money data shows that 9.7% of all borrowing is now for home improvements, making it the second most common reason for taking out a loan. The average secured loan size for these projects is £33,795.
Birmingham leads in home renovation borrowing at 13.4%, followed by Sheffield (9.5%) and Cardiff (9.1%). With house prices still high and economic pressures squeezing budgets, many in these areas are investing in upgrades rather than taking on the cost of a move.
London sees the largest average loan size for home improvements at £61,867. According to Pepper, higher property values in the capital mean homeowners are more willing, and often need, to invest significant sums to enhance their homes, including loft conversions, extensions or full refurbishments.
Brighton (£44,548) and Manchester (£43,322) follow closely. In these cities, where house prices remain resilient, and space is often scarce, upgrading an existing property is increasingly viewed as the more practical route to long-term value.
Why more homeowners are renovating in 2025
Several factors are driving the shift towards home upgrades:
High mortgage rates – Many homeowners prefer to keep favourable fixed deals secured in previous years.
Rising moving costs – Stamp duty, agent fees, and logistics often add tens of thousands to a move.
Limited housing stock – In competitive markets, extending or converting a property may be more achievable than finding a new one.
Value-adding potential – Strategic improvements, such as loft conversions or energy efficiency updates, can enhance both functionality and market value.
The renovations that offer the most return
Pepper Money highlights that while some renovations, like loft conversions, can cost up to £75,000, they may add up to 20% to a property's value, approximately £53,664 based on the UK average house price of £268,319.
Other popular projects include:
Loft conversion (bedroom + bathroom): Monthly searches: 14,000; Cost: £27,500–£75,000; Value added: up to 20%
Single-storey rear extension: Searches: 2,200; Cost: £48,000; Value added: 10–20%
Kitchen renovation (full): Searches: 2,100; Cost: £6,200–£50,000; Value added: 5–10%
Bathroom renovation: Searches: 3,000; Cost: £7,000; Value added: 4–6%
Energy efficiency upgrades (insulation, heat pump, glazing): Cost: £10,000–£15,000; Value added: 5–10%
Garage conversion: Searches: 5,700; Cost: £10,000–£20,000; Value added: 10–15%
Garden landscaping: Searches: 2,200; Cost: £1,000–£10,000; Value added: 5–8%
New windows/doors: Searches: 2,500; Cost: £4,000–£7,000; Value added: 3–5%
Exterior improvements (rendering, repainting, driveway): Cost: £2,000–£8,000; Value added: 2–5%
Secured loans offer funding flexibility
Homeowners are increasingly turning to secured loans to fund extensive projects while maintaining their existing mortgage terms. These loans allow borrowing of up to £1m over a term of up to 30 years, which can help manage monthly repayments more effectively than unsecured alternatives.
“With mortgage rates remaining high and moving costs continuing to rise, more homeowners are choosing to stay put and invest in upgrading their current homes rather than relocating,” said Ryan McGrath, director of secured loans at Pepper Money. “At Pepper Money, we’re seeing a growing number of customers taking out secured loans to fund major renovation projects, from loft conversions to energy efficiency upgrades, that add both comfort and value.”
“Choosing how to finance a home improvement project is an important decision,” McGrath continued. “The right approach can not only transform your living space but could also boost the value of your property. Whether it’s through remortgaging, taking out a loan, or using savings, it’s vital to find a solution that fits your financial goals and circumstances. Speaking with a mortgage broker or financial adviser can help you navigate the best path forward.”
Depending on individual circumstances, secured loans offer amounts ranging from £5,000 to £1 million, with terms between 3 and 30 years.
“This flexibility can help minimise monthly repayments, with available borrowing based on credit history, financial position, and home equity,” McGrath noted. “Whereas you may find an unsecured loan is limited to £25,000 over 5 years, which means your monthly repayments will be high.”
