More and more people than ever before are borrowing to extend or convert their homes. As house prices continue rising, many are finding that the best alternative to moving home is to refurbish their existing house. Mr Martin Walsh, head of lending at EBS, says the society is becoming increasingly involved in lending for home improvements.

After all, the costs of moving home mount up substantially. The reality is that there is a very significant amount of dead money involved in moving house, Mr Walsh points out. Not only are there all the traditional costs, including solicitors and auctioneers, as well as stamp duty, there can also be substantial costs involved in new furnishings and fixtures and fittings.

Many people are now opting to convert the attic or garage, or build a bedroom over the garage, while others add on extensions such as conservatories, which can give growing children a bit of space. Still more opt for added comfort with new kitchens or bathrooms or double glazing. Some loans have even been for a landscape gardener to redo the garden.

But it is not just a matter of cost. Many people are reluctant to move house, particularly if their children are settled in school and have friends in the area.

In fact, demand for money from people looking to refurbish their homes is now so strong that over a quarter of all ICS's mortgages are currently for releasing equity in the home, compared with 2 per cent in 1995.

But the important thing to remember when thinking about accessing funds for an extension is where to go. There is no reason to go to your own lender, and most will welcome with open arms those with their main loan elsewhere.

MR Walsh says all couples should look around for the best possible lending rate. Most of these people are mature couples who are a very good risk and should be in a very good position.

"Home improvements should get a very low rate," he adds.

While many people automatically go to their own lender for a top up, increasing numbers are shopping around and making substantial savings in the process.

After all, you might have a variable loan with the most expensive lender, ACC, at 5.49 per cent, whereas a new borrower can get a 4 per cent loan from the EBS for the first year.

The other issue to think about is whether to take out a new loan, or simply top up an existing one if you are sticking with your own lender.

The majority of people take out a new loan, often with a shorter repayment time than the original loan. But lenders say it is really a matter of personal preference when deciding whether to take out a new loan or to simply top up. Some people like to keep all the bills and amounts separate, while others prefer one annual statement with all loans attached.

The main choices are either to top up the principal borrowing and keep to the same repayment period, which results in higher monthly payments. Another option is to simply extend the repayment time by a few years, thereby keeping the same monthly repayments but for longer.

Again, it is really personal preference which should guide your decision - but going for a longer period does mean you will be repaying more to the lender in interest charges over the longer term.