Remortgage for Home Improvements

 Wanting to spruce up your home but lacking the funds to do so? Unsure on whether remortgaging for home improvements is the right way to go? Read on to learn all there is to know about remortgaging and whether it suits your home renovation needs. 

What Is Remortgaging?

Remortgaging is when you move your mortgage on your existing property from one lender to another, replacing the old mortgage with a new one. A mortgage is often someone’s largest financial commitment covering a span of years. But you are not necessarily required to stay on the same mortgage, especially considering that personal circumstances may change over time which can spark a reason to remortgage your property. Just like how you might shop around for the best broadband deals, you can shop around to see if you can save more on an alternative mortgage deal.

Some common reasons to remortgage include if you are:

• Looking for a better deal than what you are currently offered
• Coming to the end of your existing mortgage rate
• Wanting to borrow more money against your property

For example, you might have initially taken out a five year fixed rate mortgage where you pay the same monthly payments with the same interest rate. Yet once the initial period has ended, you could fall into paying higher interest rates under a standard variable rate (SVR), prompting you to seek alternative deals and remortgage under a different lender.

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Can I Remortgage My House For Home Improvements?

Remortgaging your home to fund home improvements is not an uncommon experience. This was particularly popular during the pandemic where home renovations skyrocketed. Major home improvements such as building extensions and remodelling can cost thousands, so you might need access to additional funding to make your plans a reality.

In short, the answer is yes, you can remortgage your house for home improvements. There are different options available if you’re looking at remortgaging for renovations, but it is important to remember that these options can increase the cost of your mortgage repayments and may be expensive. It’s crucial to consider all your available avenues, including if you can afford repayments, before making such a big financial decision.

How Does Remortgaging For Home Improvements Work?

Generally, there are 2 possible options if you want to remortgage for home improvements. Either remortgaging with another lender or borrowing more with your existing mortgage provider, both ways enable you to access additional funding for your home renovations.

Remortgaging

First, you’ll need to total up the costs of your desired home improvements in order to assess how much additional money you need to borrow. If you decide to remortgage, you’ll get a new mortgage deal with a new lender whereby you may be able to borrow extra money to cover the costs of said renovations.

As an example, if you have an existing mortgage of £150,000 and decide to build an extension which will cost you £20,000, you could apply for an additional borrowing by taking out a new mortgage of £170,000. This will enable you to use £20,000 for the extension and the remaining £150,000 for your mortgage as usual. 

It is important to note that you will be required to repay this money back over the full term of the mortgage, as well as interest.

Borrow More With Your Mortgage

If you want to stay with your existing mortgage provider or have reasonable interest rates, your lender might consider lending you more money. This can depend on how much of your current mortgage you have paid off or whether your property has changed significantly in value.

Following this route, interest rates may be different on the additional amount borrowed, and as with remortgaging, it will be secured against your home.

Is It A Good Idea To Remortgage For Home Improvements?

Determining whether remortgaging for your house is right for you is dependent upon your personal circumstances, financial situation and credit history.

Some important things to consider before remortgaging to pay for home improvements are: 

You’ll Owe More On Mortgage Repayments

Receiving additional money for funding will also reflect on the amount you have to repay. Owing more on your mortgage may not seem too bad in the short term, but you need to seriously consider how these repayments could impact your future as well. If you were to have a change in income or outgoings – whether that’s losing your job, changing your working hours, or having a family – you will still be required to keep up your mortgage repayments. As such a big financial commitment, consider how feasible repayments (plus interest) will be in your future before agreeing to remortgage.

Renovate To Boost Your Property’s Value

There are lots of reasons to invest in home improvements – aesthetic purposes, functionality, available space – but if you’re looking to spend thousands of pounds on renovations and remortgage your property, it is important that doing so will ultimately add value to your home. Consider what types of improvements will add the most value for the work required and costs. Updating bathrooms, utilising basement space, and converting garages into a more practical area are generally good ways to add value to a property. You don’t want to spend all your funding just to find out that your home’s value has hardly been affected.

Am I Eligible To Remortgage For Home Improvements?

To be eligible to remortgage for home improvements, you will need to prove that you can make repayments throughout your plan. Your income will not only impact your eligibility but also the amount that you can borrow, with some lenders permitting 3 or 4 times your income or more.

The level of equity you have in your home will usually serve as your deposit for a remortgage. The more equity, the better, as this will increase the number of lenders available. 

Also, the property type may impact your eligibility, with options for studio apartments, high-rise flats, or properties built from ‘non-standard’ materials (such as timber or concrete) being more limited.

Other factors to consider are:

• The minimum age for most lenders is 18.
• It is possible to remortgage if you have early repayment charges, but this may be more expensive. 

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How To Remortgage To Fund Home Improvements?

To go about remortgaging your property you will first need to calculate your costs and obtain any necessary permissions. At the very least, it is likely you will need building regulations approved by the local council depending on the work being done. 

Next, work out your loan-to-value (LTV) ratio. This is estimated by adding the amount of equity held in your home to any additional borrowing required for the renovations, and calculating what your property is worth. Looking on property sites to see what similar properties in the area have been selling for is a good way to determine your home’s value if you’re unsure. Then, divide the loan value by the property value and multiply by 100 to determine your LTV.

Once this has been measured, you should speak to a remortgage specialist/adviser. Getting expert advice on the subject may save you time and money, and provide you with information or routes you had not previously considered. You will initially make an enquiry and, if approved, then be matched to the best UK remortgage broker for your application.

Do I Need A Solicitor To Remortgage?

Yes, typically you will need a solicitor to remortgage your home to help with the legal side of things. However there are situations when a solicitor is not needed. If you remortgage with your current lender but under a new rate or deal, for example, there is no additional legal work required – this is referred to as a ‘product transfer’.

The majority of lenders will also include a free basic legal package in their remortgaging deals, meaning any legal fees will be covered by their chosen conveyancing solicitor, thus removing the responsibility of finding legal help from the borrower.

Apply Online To Remortgage

Apply online to remortgage for home improvements on your property with Proper Finance. After filling in all the required information, we’ll assess your eligibility and get in contact with the best lender in the UK for your application before you’re able to access the additional funding.