Remortgage For Home Improvements

Remortgage for Home Improvements

There are many reasons why people choose to remortgage their properties, one of the most common being is home improvements. Home improvements can get quite expensive and demand a lot of money out.
Especially if you have growing family extra space is always needed adding a loft or rear, side extension will give a lot more space.

How Should You Remortgage For Home Improvements?

The process of remortgaging for home improvements is the same as carrying out a regular remortgage. You need to get in touch with your mortgage broker for remortgage and additional funds application.
If you are planning to switch to a new mortgage lender or stay with the same lender, you will have to give valid reasons to your borrowing application is successful.

Once the application is submitted your lender will make necessary assessments of income and affordability, planned home improvements with additional details like planning permission and if they are happy, you will have mortgage approved.

To ensure smooth remortgaging of your property and obtain the best deals in the market, it is advisable to work with an experienced local mortgage broker. A skilled remortgage broker will scan the entire market to get you deals that suit your requirements and circumstances.

How Does Remortgaging for Home Improvements Work?

If you thinking of home improvement like new kitchen, extension in garden or loft conversion then funding a project can be done through remortgage your home for home improvement. Remortgaging for improvement involve following process.

 Step 1: Valuing Your Property

This is one of the first and important step to know the value of the house you want to remortgage. Which can help to decide what is loan to value of the house.

Step 2: Calculating Your Equity

Once you know the value of the house minus mortgage amount that will be equity in the house. This helps to understand how much money can be released from the property .

Step 3: Applying to Borrow More

Once you know the loan amount then mortgage application can be submitted with help of mortgage broker.

Pros and Cons of Remortgaging for Home Improvement

The Advantages are;

Funds are available quickly and at lower rate.

It helps to add value of the property when doing home improvement.

The Disadvantages & Risks are;

Paying higher interest rates as mortgages are for long term.

Increase in loan to value means mortgage deals are at higher rate

Borrowing against the property may risk losing the home if you not able to repay.

What are the Alternatives to Remortgaging for Home Improvement?

Further Advance can be taken from same lender instead of remortgage.

But this will create a second mortgage account on same property.

Personal Loans can be options if the loans are smaller size but they can be expensive and higher monthly repayments.

Top Factors To Consider While Remortgaging For Home Improvements.

Cost Of Home Improvement

The most important factor that comes into play during such situations is the cost of making home improvements. Discuss the estimated cost as you approach your lender for remortgaging your property.
As you calculate the cost of home improvement, make sure you take into consideration every little expense and keep a contingency fund for unexpected circumstances. This would provide you with a clear idea about the costs involved in making home improvements.

Affordability

To remortgage your property for home improvement, your lender will check your affordability of new loan repayments. Underwrites will look at your financial position and check your affordability to make sure that you would be able to repay the mortgage after carrying out home improvements. Ideally, lenders look at your income, regular expenses, and existing debts before approval.

Your Credit History

Just like getting a mortgage for the first time, your credit history will play an important role as you remortgage for home improvements. If you choose to stay with the same lender, they would be more lenient in making credit checks for the remortgage. A new lender will be a little stricter in making checks but you wouldn’t have to worry if your credit hasn’t been hampered since you took your first mortgage.

Types Of Home Improvements You Can Remortgage For

Although the exact circumstances are unique for every individual, here are some of the most common types of home improvements for which you can remortgage your property:

House extension like side or rear.
Loft conversion.
Home renovation like new kitchen or adding bathroom.