More UK homeowners are choosing to renovate instead of relocate, with new analysis from Pepper Money revealing a significant rise in secured loan use to fund home improvements. The trend reflects mounting pressure from high mortgage rates, costly moving expenses and limited housing availability.
Pepper Money’s data shows home improvement loans now account for 9.7% of all secured loan borrowing, making them the second most common purpose after debt consolidation. The average loan amount was £33,795.
Ryan McGrath, director of secured loans at Pepper Money, said: “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. 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.”
Cities leading the trend include Birmingham, Sheffield and Cardiff, where 13.4%, 9.5% and 9.1% of secured loans respectively were used for home improvements. In terms of average loan size, London tops the list at £61,867, followed by Brighton (£44,548) and Manchester (£43,322), where property values and space limitations make renovation an attractive alternative to moving.
Online interest in home upgrades is also rising. Google data shows that UK searches for “home improvement” increased by 19% in the last quarter, reaching more than 76,000 searches in April 2025.
The appeal of secured loans lies in their flexibility. “Depending on your situation, a secured loan may enable you to borrow anything from £5k to £1m with repayment terms of 3 to 30 years which means you can minimise your monthly repayments, with the amount available based on factors like your credit history, financial situation, and property equity,” said McGrath.
The value added by renovations can be significant. A loft conversion with a bedroom and bathroom, costing up to £75,000, could add as much as 20% to a property’s value. Other high-return improvements include single-storey extensions, garage conversions and energy-efficiency upgrades.
McGrath added: “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. 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.”
