Home Improvement Remortgage
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Home Improvement Remortgage
Gio Mandato and Jon Porter tell us all about home improvement remortgage.
How does home improvement remortgage work?
It’s very similar to normal remortgaging. You will just need to have an understanding of what the home improvements are and the costs, to enable us to know who we approach and what types of borrowing we can explore for the remortgage.
Home improvements can mean a new kitchen or bathroom, an extension, loft conversion, renovation and the full redesign. I’ve got one client that’s doing a remortgage at the moment before they move in. They want it fully eco and it’s a Victorian terraced property. So it’s going to cost a lot – but that’s what they want to do.
What do you need to have to remortgage for home improvements?
First, you need to have equity in your home to actually be able to borrow the additional money. If you can’t borrow what you need to do the work, then obviously a remortgage for home improvements might not actually be something that you can do.
It’s important to have some specific plans. If you came to me with a matchbox with a bit of writing on it and said “I want to borrow £1000 to be able to do this,” that’s quite difficult.
At an initial stage it’s fine, but providers will want to know what you want to do and some specific details about the home improvements you’re planning. So get quotes upfront so we can give you the best options available for you mortgage-wise.
Is it a good idea to remortgage for home improvements?
It is really down to personal circumstances. It generally works out cheaper on a mortgage that would do via unsecured borrowing like credit cards or personal loans. You do have to be conscious of the fact that you are going to be adding to your mortgage and therefore paying more interest in the long run.
So, generally speaking, it is a good idea but there are obviously alternatives as well.
Are there any alternatives to remortgaging for home improvements?
Yes, depending on the level of work and the cost If it’s just a kitchen you could find 0% finance. But if you’re doing something more expensive then it’s about working out the options.
You could do a second charge loan, for example. We need to know the full ins and outs – your plans, your personal situation, the amount of equity and what the work will do to the equity in the future. Hopefully you’re improving your home to add value to the property.
It also depends on market conditions and things like that. But then when it comes to refinancing it can be a benefit to you.
How much can you remortgage for home improvements?
Generally speaking, most lenders will go up to 85% of the current value of your home. Some may go higher. Some will be underneath that – it varies by lender. The second thing to factor into that is that no two lenders will necessarily lend the same figure.
One lender might give you 85% of the current value but you may not be able to borrow enough with them. So it’s going to be a case of speaking to us to get you an idea of the best lender for your circumstances.
How can a mortgage broker help if somebody is looking to remortgage for home improvements?
We’re here to make sure you find the best option available for you. We explore relevant avenues to giving you the best route possible for achieving your plans. I’ve had people that have wanted to do home improvements and it’s not been feasible for them. I’ve highlighted to clients that the work they’re planning could be detrimental to the value of the property, and helped them decide the right thing for them to do.
It’s all about giving you a full understanding of what is possible, what’s available product-wise and lender-wise to do the improvements you want to do.
The purpose of the work is quite key. Just doing a new kitchen or new bathroom is far more straightforward than making a house fully eco. Even if you aren’t going to be at the higher end of the spectrum, you really need to have the documentation in place.
If you come to us wanting to borrow £100,000 to do something, no lender will touch it unless you have planning permission and perhaps building regulations. If you’re not at that stage, if it’s a bit of a pipe dream at the moment, we’ll guide you. If it’s something you’re not sure you can do, we’ll be able to point you in the right direction of who to contact.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.