Saving for home improvements

Cautious homeowners avoid more debt

Saving for home improvements

In a challenging housing market, homeowners might be expected to improve their homes rather than move. But new research from AA Financial Services shows that many are being so careful with their money that they won't make any home improvements until they have enough savings to fund the project.1

The research shows that one in ten homeowners are planning some changes to their home.

Homeowners use savings to improve their property

The most popular home project is redecoration, which 42% say they'll do. That's followed by a new kitchen (27%), garden improvements (26%) and a new bathroom (25%).

Using savings is by far the most popular way of funding a project (47%), with money from a bank account a distant second (16%). The third most popular choice is to use a credit card, which just 7% say they'll do.

Mark Huggins, director of AA Financial Services, said: "Although times are tough, there are still people who want to 'do up' their home, and of course making some home improvements is cheaper than moving.

"Although the improvements people are looking to make are considerably cheaper when compared to moving, you can never start saving too soon. Hopefully when you're ready to make some bigger changes you'll have enough put away to do so.

"But while consumers are willing to use their savings for home improvements, it's still a good idea to have some money set aside 'just in case'."

Mr Huggins added: "People seem to be most keen to pay with savings, which is likely because they're being cautious. If you're careful with your finances and take the time to look around you may find that there are other options available which fit your needs."

The AA offers a range of financial products including credit cards and savings accounts. The Internet Extra (Issue 11) savings account is currently offering up to 1.60% gross/AER variable.2


Research key findings

Improvements people are planning

Choice

%

Redecoration

42%

New kitchen

27%

New patio or garden improvements

26%

New bathroom

25%

New furniture

14%

New windows

13%

Bedroom revamp

13%

Extension

12%

Conservatory

11%

Loft conversion

6%

Flood resilience measures

3%

Conversion of an integral garage to make more living space

3%

Other

7%

None of the above

4%


Most likely way to pay for your home improvements

Choice

%

Savings

47%

From money in bank account

16%

Pay on credit card and consolidate afterwards

 7%

Cash in an investment

6%

Personal loan

6%

Use a low-interest money transfer card

4%

Mortgage extension

3%

Inheritance

2%

Retirement lump sum

1%

Other

2%

Don't know

5%


1  Research carried out by OnePoll, 17–21 May 2013, among 2,000 adults.

2  AA Internet Extra (Issue 11) Savings Account

The account includes a 12 month bonus. Save from the minimum opening deposit of £1,000 up to £1 million. After the initial opening deposit, the account must have a minimum balance of £1 in order to remain open.

  • 0.50% gross/AER variable on balances below £1,000
  • 1.50% gross/AER variable for balances of £1,000 to £24,999.99
  • 1.55% gross/AER variable for balances of £25,000 to £49,999.99
  • 1.60% gross/AER for balances of £50,000 and above

After 12 months, the rates will revert to the variable interest rate, currently 0.50% gross/AER variable.

Deposit taker for AA Savings is Birmingham Midshires, a division of Bank of Scotland Plc.

21 August 2013