Remortgage For Home Improvements
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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?
A remortgage involves replacing your current mortgage with a new one from a different lender.
If you are remortgaging for home improvements, this involves borrowing more money than you currently owe. The additional funds raised, combined with any savings you might want to use, can cover the cost of renovating.
How does a remortgage for home improvements work?
A remortgage involves submitting an application and supporting evidence to a lender. They will conduct an assessment to see whether they are prepared to lend you the amount you have asked for. When remortgaging for home improvements, you will be wanting to borrow more than you currently owe, as this is what will fund the works.
There are three key factors that determine whether you can borrow more when remortgaging:
- Equity in your home – the difference between the value of the property and how much you owe on mortgages and secured loans. If you have a repayment mortgage, each payment you make reduces what you owe and consequently increases your equity. Lenders restrict what you can borrow based partly on the level of equity you’ll have once the new mortgage is taken out. If you only have a small amount of equity now, you might not be able to raise more money.
- The value of the property – if property prices have risen, your level of equity will also have increased.
- Financial circumstances – as with any mortgage, a remortgage for home improvements has to be deemed affordable following an assessment of income and expenditure.
Please also read our general guide to remortgaging for a more in-depth look at the remortgaging process.
How much can I borrow?
Lenders need to do a thorough assessment of your financial situation before confirming what you can borrow. Every lender uses a different calculation. Speaking to a mortgage advisor who works with dozens of lenders could be really beneficial, as they can do these calculations with multiple lenders for you.
Can I borrow more than the value of the house to carry out improvements?
No. Mortgage offers are based on the valuation 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.
What are ‘green’ mortgages?
Some lenders offer special deals to those looking to make their home more energy efficient, or to those who have already done so. This is typically in the form of a lower interest rate than equivalent non-green products.
A home’s energy efficiency is measured by an Energy Performance Certificate (EPC). If you take out a green deal intending to improve your home’s energy efficiency, you may be required to pay for and provide ‘before and after’ EPCs to verify this. If your home is already highly rated (usually A or B) and you apply for a green deal, the lender will check for a valid EPC as part of the application process.
EPCs are valid for ten years and can be found on the GOV.uk register.
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
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When should I look to remortgage?
You can look to remortgage at any time. However, if you are tied into a deal, there may be early repayment charges and exit fees to pay. Remortgaging might not be cost-effective in this case.
Most people remortgage at the end of their fixed, tracker, or discounted rate period. This tends to be when early repayment charges cease to be payable. If you’re mid-deal and want to explore your options, you might want to consider a further advance, second charge mortgage, or unsecured lending instead.
Please note that we do not arrange second charge mortgages or unsecured lending here at The Mortgage Store Chorley. We would refer to a third party instead.
As always, only borrow what you need and what you can afford to pay back.
What documents do I need?
The standard documents for any mortgage are proof of ID and address, evidence of income, and bank statements. Your mortgage advisor will let you know the exact paperwork needed.
You’ll also need 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.
I’m looking to borrow to renovate my home in order to add value before selling – is this a good idea?
Spending a large sum, and taking on more debt, in an attempt to increase a property’s value ahead of a sale is a risk. There’s no guarantee that you will make more than what you spend. You’ll also have increased mortgage payments in the interim.
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
