Most homeowners reach a point at some stage where they have to decide whether to carry out some major home improvements, or simply move.

When it comes to making this decision, larger loans could be swaying some who are keen to stay put, allowing them to fund their dream home improvements.

A recent survey by Sainsbury’s Bank, which has increased its personal loans to offer up to £40,000, found that four in 10 people cited home improvements as the reason for taking out a loan.

According to the research, which surveyed 2,002 UK adults, 42% of customers taking out a loan of £25,000 or above gave home improvements as the reason.

The poll, carried out by Opinium Research, found that 12% of those surveyed carried out home improvements costing more than £25,000 in the past two years.

Customers taking out a loan of this size are often doing so with multiple purposes in mind for example to pay for a wedding, buy a car or consolidating existing debts to get a better rate

Simon Ranson, head of banking, Sainsbury’s Bank
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Of the respondents, 14% said they had used a personal loan, 8% had remortgaged, and nearly half (47%) had cashed in all or part of their savings.

Sainsbury’s Bank said that since launching personal loans of up to £35,000 in October 2014, 42% of customers cited home improvements as the major reason for the loan.

Of those taking out a personal loan between £25,000 and £35,000, the average amount borrowed was £31,643.

Customers taking out large loans often have multiple purposes in mind, including weddings. Image by Jan Faukner/Shutterstock.com

Sainsbury’s has extended its larger personal loans from £35,000 to £40,000, to both new and existing customers.

Simon Ranson, head of banking at Sainsbury’s Bank, said: “With more people opting to stay put and extend or improve their existing home, the increase in our personal loan amount to £40,000 could offer people a useful alternative to re-mortgaging.”

Of the home improvers who chose not to remortgage, just over one in five (21%) said it was because the process of applying was too complicated or onerous, or they had to give too much information.

For 18% of people in this position, the costs outweighed the benefits, whether it was the fee being too high, or the difficulties of a longer repayment period.

Mr Ranson added: “Customers taking out a loan of this size are often doing so with multiple purposes in mind. For example, to pay for a wedding, buy a car or consolidating existing debts to get a better rate.”

Sainsbury’s Bank, which claims to be the only mainstream lender to offer this size of loan amount for any purpose, to both new and existing customers, said loans from £25,001 to £40,000 will have a typical rate of 6.8% APR.