Home improvements with a re-mortgage

  • It is estimated 62% of UK homeowners plan to carry out renovations this year
  • More than one third intend to finance these improvements by re-mortgaging
  • Mortgage interest rates can be lower than other borrowing options

Home improvements are high on the agenda as we have been spending so much time around the house.

However, a survey found that one in ten homeowners did not know that re-mortgaging could be used to help fund home improvements and renovations.

How does re-mortgaging for home improvements work?

If the value of your home rises with time, it also means your equity share in the property increases.

Re-mortgaging allows you to take advantage of this increase, enabling you to release some of your equity towards home improvements if you can afford to do so.

A re-mortgage works like any other mortgage application, and a mortgage broker will work out how much additional money you can borrow on top of your existing mortgage to pay for the works you need doing.

Affordability is calculated as usual, with the lender assessing your maximum borrowing to include the existing mortgage and the amount you want to top up.

When should I re-mortgage for renovations?

Re-mortgaging to a cheaper deal is always an good idea, but it could make particular sense if you need to fund some major renovation.

With a re-mortgage secured against your home, the interest rates are also typically lower than with an unsecured personal loan and typically gives you a longer timeframe in which to repay the loan, meaning it is likely to cost you less each month.

But this can also mean you are spreading out the repayment over a much longer time period, so you may end up paying more interest overall.

Bear in mind that you cannot re-mortgage until your introductory rate of interest finishes without facing extra fees.

Where do I start?

Be clear how much your home improvements are going to cost, including VAT and a budget for possible extra expenses in case the work falls behind schedule.

You will need to present this information to the lender as they will often want you to provide evidence of the cost of the works planned.

Your next move should be to speak to a professional mortgage broker to check that you will be able to successfully re-mortgage for the required amount.

Ideal time frame to start looking into the available options is six months away from the end of your  current deal as arranging this type of re-mortgage can take a little time.

Please check out our re-mortgage guide fundugive2 re-mortgage guide