What we cover in this guide
Possible home improvement costs
Selling your property and looking for somewhere new to meet your changing needs can seem like an easy option, but most property experts will tell you that staying in your current home and making improvements – such as adding a bathroom or extra bedrooms – is usually far more cost-effective than buying a larger house.
However, despite being perhaps cheaper and keeping you close to your familiar community, home alterations and improvements do come at a cost. Depending on the extent of the work you plan to carry out, this could amount to many thousands, or in fact tens of thousands, of pounds. Taking out a remortgage on your property can be a fast, efficient way to raise a significant amount of money.
Home Improvement Remortgage
A remortgage for home improvements entails taking out a new mortgage on your property. You can then take advantage of the value already in your home, which is the difference between the value of the property (which may have increased over the years) and the remaining balance on your existing mortgage.
How much can you remortgage for home improvements?
If the value of your home is £350,000 and the remaining balance on your current mortgage is £150,000, then you have £200,000 of equity in your home.
However, you should note that lenders will not be prepared to let you borrow the entire value of your home. Like a conventional mortgage, you will likely get a maximum loan value of 90% of the property value. Lenders will then make calculations based on the current value of your home.
As with a mortgage, a secured loan is secured against your property, meaning your home is used as a guarantee of repayment. So, if for whatever reason you are unable to meet the repayments in the future, your home could be at risk.
When considering a secured loan, it is vital to get an accurate figure for the monthly repayments. Therefore, you can ensure that you are able to repay them. If you fail to keep up with the payments, then not only could you potentially lose your home, but your credit rating will be adversely affected.
Finding the best terms and rates for a personal secured loan is fairly straight forward. There are various loan comparison websites available, but it is advisable to talk to a professional for guidance. They’ll be able to run through your situation with fresh eyes and perhaps suggest options you hadn’t thought of.