As we prepare for friends and family to descend on our homes during the festive season, many of us want to treat ourselves to more modern décor, a new bathroom, kitchen or even conservatory.

Treating home improvements as early Christmas presents is emerging as a popular option as people invest in somewhere to cook family meals, or deluxe bathrooms to unwind in after partying and entertaining, in the run up to Christmas.

This relatively new phenomenon is supported by recent Halifax unsecured loans' data which has recorded an increase in applications for unsecured personal loans during October over the last two years.

During 2003 and 2004, a significant rise in the number of people looking to make major improvements to their home can be seen in the months immediately before Christmas. October 2003 saw nearly 10% increase in the monthly average and a similar rise occurred last year too.

This trend for 'making over' our homes was reflected in recent research which showed that we are spending around £15.4 billion a year on home improvements and repairs, which is 5.8% more than the previous year.

In fact, of the 60% of UK homeowners who have carried out improvements in the last couple of years, new kitchens and bathrooms were two of the most popular options.

More specifically, over a third (34%) of these opted for a new bathroom, while just under a third (32%) felt it was time to have a new kitchen fitted.

New flooring, garden improvements and double glazing were also common choices.

However, many of us also wait until January to take out a loan. The lure of half-price kitchens, sofas and bathroom suites entice bargain hunters, making waiting for the January sales the best option for many people.

The number of people taking out Halifax unsecured personal loans for home improvements in January 2005 was up by over a third (36.4%) more than the average monthly figure for the whole of the previous year.

Halifax’s Ian Corfield commented: "As the season of parties, unexpected guests and entertaining approaches, it is only natural that we want our homes to look their best."

When taking out a loan for home improvements, there are a number of factors to bear in mind to avoid a financial hangover in the New Year:

• Be wary of hidden costs you may not have budgeted for. For instance, if buying a new kitchen, check whether appliances are included in the price or if you will be charged extra for them. Also, do not forget to take the cost of tradesmen into consideration.
• If you are using a tradesman, make sure that they are registered with the appropriate trade body. It is also a good idea to see examples of their previous work.
• Decide how long you want to take the loan out for. If you need to keep monthly payments to a minimum, then choose a longer repayment period, but be aware that this will mean you pay back more in total. If you can afford to repay a higher amount each month, then you could save money in the long term.
• Look out for other special features, for example, is there a penalty for early repayment, or opportunity to take a break from repayments? Halifax allows three months from taking out the loan before repayments are made.

The DIY chain B&Q may also welcome an early Christmas present culture. Profits at the Kingfisher-owned company, more than halved after it cut prices during autumn in a bid to shift stock.

"The UK retail environment continues to weaken, significantly impacting B&Q's sales and profits," said Kingfisher's chief executive Gerry Murphy. "Continued weakening consumer demand for housing-related products, together with widespread price promotion and rising costs, is seriously impacting UK retail performance," he said.