Nationwide building society has doubled the maximum personal loan it will offer borrowers to £50,000, citing the continued increase in building costs as the reason for the change.
The society previously offered up to £25,000 for qualifying customers but said this was no longer enough to fund some home improvement projects.
It said its research had found that half of those doing building projects had already had to reduce or shelve their plans due to finances, and that with construction costs forecast to rise by a further 15% over the next five years, more would face steep bills.
The increased loan amount will be available to Nationwide current account holders who pass its affordability checks.
The interest rate will depend on a customer’s circumstances but the representative APR – which is the maximum that at least 51% of borrowers will pay – is 7.9% for loans of £25,001 to £35,000 and 8.9% for loans of £35,001 to £50,000.
The loans can be arranged over one to seven years and there is no charge to pay off the borrowing early.
Nationwide is not the first to offer such big loans: HSBC has one for its Premier account customers and First Direct, NatWest and Shawbrook will consider lending up to £50,000.
Andrew Hagger, a personal finance expert at website Money Comms, said they were still in the minority. However, he added: “I think it’s a sign of the times that you can now apply for a £50,000 unsecured loan – it may be more expensive than a mortgage further advance rate wise, but way quicker to arrange plus no fees to worry about and no early repayment charge either.”
Although the society said it was responding to rising building costs, applications will be considered for other reasons.
Darren Bailey, the head of personal loans at Nationwide, said: “Whether you’re looking to fund home improvements, a new car or consolidate existing debts, we’ll be able to meet more of our customers’ borrowing needs.”
Asked about what the society would do to make sure people were not taking on unaffordable debt, Bailey said: “As a responsible lender it is important we make sure customers don’t overstretch themselves.
“Each loan application is individually assessed to make sure people can afford the repayments alongside their existing and any future outgoings. Those applying for a personal loan can get a soft quote which advises them if they are likely to be accepted and at what APR without impacting their credit file, allowing them to make an informed borrowing decision.”
