Borrowing to fund home improvements could be money well spent

Halifax and Nationwide have separately released research showing the potential value-added by home improvement projects. Although most home improvements add monetary value to a property, the value recouped may only represent a fraction of the actual cost.

Both the bank and the building society agree that the most lucrative home improvement you could make is a loft conversion. According to Nationwide, "Converting the loft to add 300sqft foot of floor space incorporating the extra bedroom and bathroom would add about 21% to the value of the property - around £34,000. Estimates of the cost of such a loft conversion are around £17,500."

Halifax also identified which features of a home are considered to add value and create good, first impressions and those that are considered to be undesirable and potentially detract from the monetary value of a property.

When it comes to DIY priorities, limescale or mould build up is considered to be the one of the most undesirable 'cosmetic' (11%) features of a property. With regards to other features of a property, a lack of parking space and a garden area is also undesirable amongst 12% and 11% of respondents respectively.

Jon Sykes, head of mainstream mortgage products at Halifax said, "With any home improvement project planning is key. Changes that are purely down to personal preference and a desire to have the latest 'must have' features can strip value from your property when it comes to selling it.

"Essential repairs and replacements are always worthwhile, as avoiding them can lead to bigger problems in the future. And, if you are making improvements, remember that any alterations must be sympathetic to the surroundings, done to a good standard and compliant with building and planning regulations."

Says Nationwide, "If the floor area of the property is increased to accommodate an extra bedroom, for example by extending over a garage, this helps to maximise the return. Adding a bedroom of 140sqft (about the size of a double bedroom) to a two bedroom house increases its value by 12%. Adding the same to a three bedroom house increases its value by 8%."

Click here for a low cost Northern Rock Loan ideal for funding home improvements