Remortgage For Home Improvements
- Expert, personalised guidance at every stage
- Advice available seven days a week
- See if we can help you find the right deal from hundreds of available mortgage products
Get in Touch
On this page (click arrow to expand)
Do you need a new kitchen or bathroom? Considering an extension or loft conversion? Wanting to redecorate or landscape the garden?
Whether it’s a big renovation or a lick of paint, you might want to remortgage for home improvements.
What is a remortgage for home improvements?
A remortgage is when you replace your current mortgage with a new one from a different lender.
If you are remortgaging for home improvements, this involves paying off the current mortgage with a new one, and borrowing extra money at the same time to cover the cost of the work you want to do to the house.
How does a remortgage for home improvements work?
Remortgaging involves applying for a new mortgage, so it’s important to check lender criteria and affordability first.
Remember, you need to borrow more than you currently owe in order to fund the home improvements. It’s a good idea to get two or three quotes for the work before applying so you know how much you’ll need.
You should also check to see if the work you want to do requires planning permission; if it does, some lenders might need to see that planning permission has been granted before issuing a mortgage offer.
In addition, you’ll need to provide documents like bank statements and proof of income. The lender will check your credit history, assess if you can afford the new mortgage, and do a basic valuation of your property.
How do I know if I can afford to borrow more for home improvements?
There are three key factors that determine whether you can borrow more when remortgaging:
Equity in your home
Equity is the difference between your home’s value and what you owe on mortgages and secured loans. With a repayment mortgage, each monthly payment reduces what you owe, increasing your equity.
Lenders limit what you can borrow based on your equity after taking out the new mortgage. If you don’t have much equity, you might not be able to borrow more. Each lender’s limit is different, though typically your equity after additional borrowing needs to be around ten or fifteen percent of the house value as a minimum.
The value of the property
If your property’s value has gone up, your level of equity has also increased.
More equity makes it easier to borrow additional funds.
Financial circumstances
As with any mortgage, a remortgage for home improvements has to be deemed affordable by the lender. They will assess your income and expenditure to ensure you can afford it.
For a detailed explanation of the remortgaging process, please refer to our general guide to remortgaging.
Why The Mortgage Store Chorley?
Exclusive rates you won’t get directly from lenders
A dedicated point of contact from initial enquiry right through to completion and beyond
Appointments seven days a week, to best suit your schedule
Ongoing rate monitoring until completion as standard
Chat with our expert advisor
Can I borrow more than the value of the house to carry out improvements?
No. Mortgage offers are based on the value of the property as it is now, not as it could be once work is carried out.
Lenders need you to retain some equity in the property. You may be able to borrow up to 85% or 90% of the property’s current value, but it’s highly unlikely you could borrow more than that.
The house will be re-valued when you next refinance.
Is remortgaging for home improvements a good idea?
Remortgaging allows you to access equity in your home to fund improvements without taking out separate loans. A remortgage may give you access to lower interest rates than are available on personal loans.
Improvements can also increase the value of your property, though this is not guaranteed. Consider how the extra borrowing fits into your short-term and long-term plans.
Remortgaging can come with costs such as arrangement fees. If you have Early Repayment Charges on your existing mortgage, it could be costly to pay it back; in this case, you may wish to consider additional borrowing with your current lender or unsecured loans instead.
Remember, too, that borrowing more could increase your monthly payments.
What costs are involved with remortgaging?
Some remortgage deals have very low or no up-front fees.
Valuation
The lender need to value your property. Some deals include a free valuation, so you don’t have to pay for this.
Legal fees
Some deals also cover standard legal fees. In these cases, the lender picks the firm of solicitors that will act for them and for you.
Alternatively, you might choose a deal where you pay for the legal work yourself, which gives you the freedom to choose your own solicitor. You might get a small amount of cashback from the lender instead of free standard legal fees.
You need a solicitor to handle the transfer between banks, including updating Land Registry.
Associated costs
There may other costs such as application fees, exit fees, and Early Repayment Charges. It’s essential to carefully consider the costs and benefits of remortgaging and to compare offers from different lenders to make an informed decision based on your financial goals and circumstances.
When should I remortgage?
You can remortgage at any time, but there may be Early Repayment Charges and exit fees if you do it while still tied into a deal.
Most people remortgage at the end of their fixed, tracker, or discounted rate period to avoid these charges and higher follow-on rates.
A mortgage offer is typically valid for up to six months, so it’s a good idea to start looking for deals up to six months before your current deal ends. This gives enough time for legal checks and should ensure your new mortgage starts right after your current deal ends.
Do you have a question?
What documents do I need to remortgage?
You’ll need proof of ID, proof of address, bank statements, and income verification as a minimum. The exact requirements depend on your situation; your advisor can guide you.
It’s also handy to get quotes for the proposed work in advance. Not only does this give you an idea of cost, so you know how much extra to apply for, but it also allows the lender to see that you are likely to use the funds for their intended purpose.
If the work you intend to carry out is structural, some lenders may want to see proof of planning permission and/or building regulations approval.
Can I remortgage for home improvements with bad credit?
Potentially, yes, but it depends on your credit issues.
You might need a specialist lender, which can have higher interest rates. Alternatives such as a second charge, further advance, or unsecured lending may be more suitable.
Look at our page on bad credit mortgages for more information.
What is a green mortgage?
Green mortgages are special deals offered by some lenders for making homes more energy efficient, or for homes that are already energy efficient.
They can come with lower interest rates compared to regular mortgages.
Energy efficient is measured using an Energy Performance Certificate (EPC). If you take out a green mortgage to make your home more energy efficient, you might need to pay for and provide ‘before and after’ EPCs.
EPCs are valid for ten years. You can check yours on the GOV.UK register. Lenders won’t accept expired EPCs.
How can The Mortgage Store Chorley help with a remortgage for home improvements?
Looking to spruce up your home with some renovations? Look no further than The Mortgage Store Chorley!
We love helping homeowners like you remortgage to fund those exciting home improvements you’ve been dreaming of. With our friendly expert guiding you every step of the way, you can unlock the value in your property and access the funds you need to create the home of your dreams.
Say goodbye to outdated kitchens and bathrooms, and hello to your perfect living space! Let us help you turn your house into the home you’ve always wanted. Get in touch with us today.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
