Home improvements are incredibly common among homeowners, especially those who are feeling settled into their homes and want to refresh, open, or extend their space. Home improvements can add significant value to your home if you want to sell in the future or just improve your living environment.
Home improvements, however, are costly, and many don’t have access to the cash needed to complete the work. There are many ways to raise cash for your project, from personal loans to credit cards and even remortgaging. Let’s find out just how useful remortgaging your home can be when it comes to home improvements.
Remortgaging: How and Why it Works.
Remortgaging refers to replacing an existing mortgage with a new one and works by approaching your current or new lender to discuss the details of your finances, why you want to remortgage, and see how much they are willing to lend.
Homeowners might remortgage to secure a better interest rate, reduce their monthly payments, or release equity, which allows homeowners to borrow more than their remaining mortgage balance, freeing up cash for various uses, including home improvements.
Most lenders will require that you have had your existing mortgage for at least 6 months before you’re able to remortgage. The amount you can borrow will vary from lender to lender but will depend on your income and the type of mortgage you have, as well as the value of your property.
Is it Possible to Remortgage Solely for Home Improvements?
It is possible to remortgage your property solely to release equity to make home improvements, in fact, it’s a great way to do this. Homeowners rarely have the funds available for improvements such as an extension, new kitchen or bathroom, installing solar panels, etc., all of which not only make your home more habitable but also increase its value if you were to sell in the future.
To find out how much you need, it’s vital to get proper estimates of how much the work will cost. This can include anything from building inspections and planning permission to contractors, painters, and directors. Work sometimes runs over budget, so it’s important to allow for that, as well as VAT. Once you’ve found how much it will cost you can then see how much you need to increase your mortgage.
Points to Consider When Remortgaging.
Mortgages are loans, therefore there are always points to consider mitigating risks both on your and your lender’s part. When you remortgage, you will increase your monthly payments or extend the life of your mortgage, or in some cases, both. Other important points to consider when remortgaging is:
- Paying Interest Over the Long Term – remortgaging can lower your monthly payments, but it also prolongs the length of the contract, which in the long run will be more expensive.
- Fees and Costs – to remortgage there are certain costs involved such as early repayment charges, valuation fees, legal fees, and arrangement fees for the new mortgage.
- Possibility of Overspending – it’s easy to overspend on a renovation when you have extra cash at hand so it’s important to stick to a budget to avoid accumulating more debt than originally planned.
How a Capital Raising Mortgage Works.
A capital raising remortgage refers to the equity that is released from your property with a remortgage or secured loan taken out against the property. The equity refers to the funds you currently have between your existing mortgage and your property’s value. There are many investments the capital can be used for, including home improvements and most mortgage lenders provide them up to 75% of your property value.
It is always advisable to take careful consideration before taking out a capital-raising remortgage, as you are using your property as collateral if you’re unable to meet repayments.
Need Help Raising Capital for Home Improvements?
The amount you can borrow when remortgaging will vary from lender to lender but will also depend on your income and the type of mortgage you have, as well as the value of your property.
If you’re thinking of remortgaging to finance a home improvement project, here at TaylorMade, we can discuss your situation and see whether remortgaging is the best option for you. If it is, we can help you find the very best deal on the market.
TaylorMade, an Independent Mortgage Advisor in Manchester, can Help.
TaylorMade Finance are a leading mortgage broker in Manchester, also operating all over the UK, providing personalised remortgage solutions, designed specifically to fit your needs and circumstances.
Contact our friendly team today to make your dream home a reality.
