Home renovation loan agreement

Family money for the extension

Renovation loans fund a specific project — but the money lands in the same current account as everything else. Recording the purpose in the agreement (“for the loft conversion at 12 Elm Road”) is what later proves what the money was for, and it’s one more piece of evidence that this was a loan, not a gift.

One advance, honest dates

Builders’ schedules slip; contracts shouldn’t. Set the advance for the date the money actually moves, and tie repayment to dates, not milestones you can’t control — “when the works finish” is an argument waiting to happen. If the plan is to repay from a remortgage once the works add value, write the date you expect that to happen, and allow early repayment so a faster remortgage settles it without ceremony.

Example: £30,000 for the loft

If the remortgage disappoints, the fixed date still stands — and renegotiating a real date beats arguing about whether the works ever really “finished”.

What the agreement should pin down

• The amount and the date the money moves — with a payment reference on the bank transfer so the advance is provable.
• The repayment plan — instalments or a single date, and what happens if a payment is missed.
• Interest, if any. There’s no statutory cap between family members; the builder warns (never blocks) at 25%+. Remember interest you receive is taxable income.
• Loan, not gift — stated in terms. It protects the borrower’s siblings, the lender’s estate planning, and everyone’s memory.
• Signatures from both sides — electronic signing is valid in England and Wales, and it’s how LendRight finishes the job.

If repayment stalls

Money claims start online wherever you live — through Money Claim Online or the County Court Money Claims Centre — and claims up to £10,000 usually go to the small claims track, built for people without solicitors. If an in-person hearing is ever needed, it’s listed at a county court hearing centre convenient to the defendant, wherever in England and Wales they live. In practice, a signed agreement plus a bank record is usually enough to make the conversation end long before a courtroom.

Under the Limitation Act 1980 you generally have six years from a missed due date to bring a claim on a simple contract — one more reason the agreement should set real dates.

Scotland and Northern Ireland — a different story

If either of you lives in Scotland or Northern Ireland, the builder will tell you honestly that we can’t serve you yet — those are separate legal systems, and a template written for England and Wales isn’t automatically right there. Everything about that decision is on our coverage page.