A Quick Guide To Remortgaging For Home Improvements

It can be difficult to work out how best to go about paying for home improvements, but one option to consider is remortgaging – a way to borrow additional money by setting up a new mortgage deal with your lender (or a new one) against the value of your property.

You have two options available to you if you do want to go down this route:

Borrowing more on your existing mortgage

If you’d prefer to stay with your current lender, it’s possible that they’ll lend you more money to help you do up the house. Their decision will depend on how much of the mortgage you’ve paid off already and whether you’ll be able to afford an increase in your monthly repayments. 

Note that the interest rate on the new amount you want to borrow may be different to the interest rate you were offered on the original loan. It’s also important to remember that any additional money you borrow will be secured against the house.

Remortgaging

Another option is to source a new mortgage deal with a different lender, allowing you to borrow enough to cover the costs of the work you want to do.

Before you go down this route, make sure you get quotes for all the projects you have in mind so you know what you’ll need to borrow.

Factors to bear in mind when considering this option include the possibility of being charged early repayment fees by your current lender, so make sure you check your mortgage agreement so you know what to expect.

And you may also find that you’ll pay a higher rate of interest on the loan over its full term, so it is important to understand the full costs involved.

Furthermore, while remortgaging for home improvements will be a good strategy for some people, it may not be the right route for you. 

If you’re above a certain age, for example, it can be difficult to remortgage because affordability checks are based on age and income.

Additionally, if house prices drop, you could find yourself in negative equity, which may make it harder for you to move or remortgage in the future.

As such, if you’re over 50, you might want to look into equity release as an alternative strategy to fund renovation work at home. 

Here, you can remortgage to a lifetime mortgage and pay off the rest of the mortgage using the money you gain access to – but, again, you may face early repayment charges if you opt for this pathway.

Mortgage experts

Naturally, there’s a lot to think about and many pros and cons to weigh up, which can be tricky if you’ve never considered remortgaging before.

If you’d like any guidance on the matter, get in touch with the BR Needham team to see how we can help. As qualified advisers, we can do all the hard work for you and help you make property purchasing decisions, no matter what kind of mortgage you’re looking for.