Homeowners 'using personal loans for renovations'

Many homeowners are splashing out on home improvements, in a bid to make their property more sellable.Lloyds TSB said today that 20 per cent more people applied for a personal loan in order to fund home renovations over the first half of this year than did so in the equivalent period in 2007.Moreover, a poll from the bank found that 55 per cent are using the improvements to boost the value of their home - thereby counteracting some of the house price drops that have been experienced over recent months.The credit crunch has led to a reduction in consumers' spending power as well as a severe constriction on the mortgage market, both factors which have led to the decline in prices.A recent survey from Nationwide even suggests that homes have dropped in value by over eight per cent over the past 12 months.David Wishart, director of personal loans at Lloyds TSB, said: "In recent months we have seen a significant increase in home improvement personal loan requests. For the last decade homeowners have been able to sit back and rely on rising property prices to increase the equity in their home but sadly this is no longer possible."He added: "If you want to trade up and avoid substantially increasing your mortgage, you'll need to add value to the house you're currently in."