How People Are Paying for Home Renovations in 2024
Home renovations are a great way to breathe new life into your old property. The options for transforming your living space are endless, from new flooring to upgrading your doors, or even an entirely new kitchen. But how are people funding their home renovations in 2024?
We surveyed 2,000 UK and US adults who have renovated their homes in the past five years, to discover how they funded their renovations and where people are most likely to go over budget.
KEY FINDINGS
- 52% of homeowners are using savings to pay for their renovations, this is higher in Britain (62%) compared to the US (43%).
- 10% of young homeowners are remortgaging to cover the cost of their remodel, whilst 42% of millennials use credit cards to cover the costs.
- On average Brits spend £14,517 on renovations, while Americans spend less at $11,893.
- One in five renovations go over budget, with women more likely to overspend than men.
- One in five people in a relationship have done a home renovation without telling their partner, with people aged 35-44 most likely to do so.
- 52% of homeowners are using savings to pay for their renovations, this is higher in Britain (62%) compared to the US (43%).
Age can play a large role in how people are able to pay for their renovations. 42% of millennials (aged 25-34) use credit cards to pay for their renovations, compared to just 19% of 45-54 year olds. Many reasons could explain these age-related variations, such as having a longer time to save, differences in disposable income, and life circumstances. For example, 9% of couples aged 25-44 used their wedding gift to pay for their renovation.
52% OF HOMEOWNERS ARE USING SAVINGS TO PAY FOR THEIR RENOVATION
|
Payment method |
Proportion of renovators using this method |
|
Savings |
52% |
|
Cash |
37% |
|
Credit card |
28% |
|
Bank loan |
10% |
|
Inheritance |
6% |
|
Someone else paid for it |
5% |
|
Loan from friend or family |
5% |
|
Remortgage |
5% |
|
Wedding gift |
3% |
10% OF YOUNG HOMEOWNERS ARE REMORTGAGING TO PAY FOR THEIR RENOVATION
Remortgaging involves switching your existing mortgage to a new deal, often with a different lender, as a way to borrow more money which can be used to fund renovation projects. Our survey discovered that people aged 25-44 are more likely to remortgage their home to fund a renovation than any other age group.
Michael Johnson at Mortgage Minder explains what to consider if you are looking to remortgage your home to pay for an upcoming renovation:
A remortgage with additional borrowing or further advance from your current mortgage lender can be a cost-effective way to finance a home renovation. Lenders have a variety of options which can allow flexibility for you to be able to hopefully improve your home within a monthly cost that you are comfortable with.
It is always worth speaking to a mortgage broker who can assess the options and costs for you and offer their professional advice. As you can usually spread the cost over a longer term, it can prove the cheapest monthly option available. Plus, adding value to your home could allow you to benefit from better mortgage options when the work is completed.”
“If you have a good amount of equity in your home, monthly disposable income available, or your mortgage fixed period is due to end shortly, these signs can indicate that using a remortgage to fund home improvements might be the best option."
WHEN SHOULD YOU LOOK AT ALTERNATIVE OPTIONS TO FUND YOUR RENOVATION?
Michael explains, “Always make sure you can afford the monthly payments or your home could get repossessed. If you only need to borrow a small amount of money or don't have much equity in your home there might be alternative options which might work out better, but it is always worth speaking to a specialist.
HOW BRITS ARE PAYING FOR THEIR RENOVATIONS
In the UK, 62% of respondents used savings, 28% used cash, 19% used a credit card and 8% used inheritance to pay for their home renovation.
5% of renovators in the UK used wedding gifts to pay for their renovation projects, which is significantly higher than in the US. For young couples struggling with high property prices and living costs, the practicality of financial contributions over traditional presents means couples can personalise their space and increase property value without incurring additional debt.
HOW ARE PEOPLE IN AMERICA PAYING FOR THEIR HOME REMODELS?
Payment methods differed significantly for U.S. homeowners, with the majority using cash, 43% using savings, and 37% using credit cards to pay for their home remodel.
One in 20 Americans remodelled their property using a loan from friends or family. Without the formalities of a bank loan, you can benefit from minimal or no interest rates, flexible repayment terms and a simplified approval process. However, this also means the lack of formal legal protections and unclear terms can lead to misunderstandings and create a potential strain on relationships.
HOMEOWNERS ACQUIRED £12,825 OF DEBT TO PAY FOR THEIR HOME RENOVATION
Of those that received a loan from a bank, friends or family, or used a credit card to pay for their renovation, the average debt acquired across both the UK and USA was £12,285 or $15,679.
Brits borrow an average of £14,517 to carry out their projects, while Americans borrow less at $11,893. We also found that women borrow less than men for home renovations, at £11,408 and £14,728, respectively.
|
Amount borrowed to pay for renovation |
% of people that borrowed this amount |
|
Under £5,000 |
36% |
|
£5,000-£10,000 |
22% |
|
£11,000-£16,000 |
12% |
|
£17,000-£22,000 |
9% |
|
£23,000-£28,000 |
7% |
|
£29,000-£35,000 |
4% |
|
£36,000-£41,000 |
3% |
|
£42,000-£49,000 |
1% |
|
Over £50,000 |
2% |
1 IN 5 RENOVATIONS EXCEED THEIR BUDGET
People aged 45-54 are most likely to go over budget on their renovation, whilst 35-44-year-olds are most likely to stay within budget.
13% of respondents aged 18-24 were under budget, the highest of any age group. This could be the result of more conscientious spending due to having had less time to save or incentives for first-time homeowners to buy newer builds, resulting in less need for renovation work to be carried out.
Women are most likely to overspend on their renovation projects, with 22% saying they exceeded budget, compared to 18% of men.
|
Unexpected cost |
% of Brits who incurred additional cost |
% of Americans who incurred additional cost |
|
Repairing hidden problems |
19% |
34% |
|
Cost of labour |
18% |
21% |
|
Paint |
12% |
24% |
|
Plumbing |
10% |
21% |
|
Fitting costs |
14% |
12% |
|
Rewiring |
10% |
15% |
|
Plastering |
13% |
10% |
|
Structural changes |
7% |
14% |
|
Cost of a skip |
11% |
1% |
|
Tip removal |
8% |
4% |
REPAIRING HIDDEN PROBLEMS IS THE HIGHEST UNEXPECTED COST FOR RENOVATORS
U.S. homeowners (34%) are more likely than UK homeowners (19%) to spend money repairing hidden problems discovered during remodelling. However, this was the highest unexpected cost for both sides of the Atlantic during home renovations.
Other unexpected costs for Brits were fitting costs (14%), paint (12%), and skip hire (11%).
HOW MUCH DOES THE AVERAGE SKIP COST?
In the UK the cost of a skip can vary depending on the size needed and the type of waste you’re disposing of. On average you can expect to pay between £100 and £300 per week for a smaller skip, or up to £500 for a larger size.
24% OF AMERICANS WERE SHOCKED BY THE COST OF PAINT
One in four (24%) U.S. renovators found the price of paint to be an unexpected cost, as well as plumbing (21%) and labour (18%).
Paint pricing remains high in the US as a result of supply chain disruptions between 2020 and 2022. The disruptions were caused by Covid-related factory shutdowns, raw material shortages, shipping delays, and an increased demand for home improvement products. Despite these delays being mostly solved, the impact on price still remains, leading to unexpectedly high costs for renovators in the US.
HOW TO MAKE SURE YOUR RENOVATION STAYS WITHIN BUDGET
Staying within budget can be a huge task for renovators. Here are five key steps to take to ensure your remodel stays on track:
THE BIGGEST CAUSES OF DELAYS DURING HOME RENOVATIONS
Often, external factors outside of anyone's control can lead to delays in the timescale of renovation work. The most common reasons for delays in renovations in the UK and U.S. were hidden damage (20%), weather conditions (20%) and a shortage of materials (16%). Unsurprisingly, Covid was cited as a significant factor in delays to remodelling work carried out over the last five years.
THE MOST COMMONLY DISCOVERED HIDDEN DAMAGE IN HOME RENOVATIONS
Hidden damage is one of the most common causes of renovation delays, but what are the most common issues you should look out for?
MORE THAN ONE IN THREE PEOPLE IN A RELATIONSHIP HAVE CARRIED OUT A HOME RENOVATION WITHOUT TELLING THEIR PARTNER
Would you carry out home renovations without telling your partner? Well, 35% of people in a relationship said that they had. People aged 35-44 are most likely to carry out secret renovations, whilst those aged 55-65 are the least likely, with only 5% of respondents in that age range saying they had carried out a home renovation in the past five years without informing their partner beforehand.
26% (one in four) of U.S. homeowners in a couple have renovated without telling their partner, compared to just 14% of Brits (one in seven).
THE TOP REASONS PEOPLE RENOVATE WITHOUT TELLING THEIR PARTNER
Why did respondents carry out renovation work secretly? 46% of Brits said they were worried their partner didn’t want it, whilst 59% of Americans said they wanted to surprise their partner with their renovation.
The 35-44 age group was the most likely to carry out a secret renovation in case their partner didn't agree to it, with other reasons relating to timing issues such as “they took too long to make decisions” and “I knew that if I didn't make a start, nothing would happen.”
METHODOLOGY
We surveyed 2,000 adults across the UK and the US who have renovated their home in the past five years to find out how people were paying for their renovation projects, whether they were staying within their pre planned budgets and where they faced delays with their projects. We also asked whether they had ever carried out a renovation without telling their partner and the reasons behind doing this. On how homeowners are paying for their remodels, survey respondents could select more than one payment method.
Information on the cost of a skip is from Checkatrade and on the US price surge of paint is collected from Architectural Digest and News Observer.
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