Remortgaging for Home Improvements
If you’ve been dreaming of a new kitchen, loft conversion or something even greater to improve your home, sourcing the finances is what usually delays those dreams.
However, since house prices have steadily risen over the years, your home could be worth substantially more than you originally paid for it. With that in mind, there is a potential pot of money to be utilised, should you choose to remortgage your property for home improvement purposes.
The remortgage market, in particular, has been buoyant, recently. Homeowners have begun to take advantage of this. Not only have they acquired lower rates on their repayments but, in doing so, have been able to release a lump-sum of cash for home improvements or other spending.
Discover why remortgaging for home improvements could work for you:
What’s the best way to fund your home improvement project?
In an ideal world, any sort of funding would be in the form of cash. Cash that you have acquired through savings, inherited or even won. This just makes the process a whole lot easier, if you’re planning on making home improvements. It means you don’t have to worry about paperwork, interest rates or borrowing.
Obviously, the above scenario is not realistic for most of us, therefore, another option is to remortgage for home improvements.
Firstly, you will need to do some research. Perhaps, source a mortgage broker like MortgageKey or seek advice form a professional before choosing to remortgage.
From here, a full remortgage would mean refinancing your entire mortgage deal with your existing or new lender. It could be as simple as moving to a different deal with the same size mortgage, or taking on extra borrowing and releasing some of the equity in your home by prolonging the mortgage.
It’s worth noting that opting out of a mortgage deal before your current deal has expired may result in early repayments charges. Additionally, you will need to demonstrate to your lender that you can afford the repayment. They will also require a breakdown of how you intend on spending the money you secure.
Are all lenders keen to offer remortgages for home improvements?
Naturally, all lenders will be inquisitive and obliged to carry out all the fundamental and regulatory checks and procedures. It’s the same process of taking out any sort of mortgage deal. Lenders will ask the reason for raising capital but should allow equity to be released for the purpose of home improvements, if everything is in place.
Understandably, mortgage rates will vary depending on the percentage of the property your mortgage represents. This is known as your Loan to Value (LTV). Lenders will place constraints against how much capital they allow to be raised for home improvements, usually somewhere around 80-90% of the current property value.
Could you use a personal loan for home improvements?
In short, yes, of course you could. But you must also consider your own circumstances and whether a personal loan would be right for you.
The application process tends to be easier and they don’t rely on equity within a property, to be able to access the funds. Plus, there’s no risk of losing your home, if you can’t keep up with repayments.
Having said that, personal loans cannot be spread over 20-30 years, unlike a traditional mortgage. This means that monthly repayments are often a lot higher on a personal loan because you don’t have as long to pay back what you’ve borrowed.
There are lots of benefits to remortgaging and remortgaging for home improvements is just one of them.
Nowadays, people are finding that improving their own home, with an ambition to either make more profit when they sell it, or make to make it more comfortable to live in it, is an easier option than finding and buying their dream home.
How can MortgageKey help?
MortgageKey are an award-winning mortgage broker with masses of expertise in remortgaging for home improvements.
Our friendly advisors have the knowledge and expertise to help you to secure the ideal remortgage deal for you. They also know exactly what will be required at each stage, giving you that little head start before you submit your application, and more chance of it being successful.
Get in touch today and speak to an advisor about remortgaging for home improvements.