If you’ve found yourself a little more penned in than usual, you’ve probably contemplated freshening up your living space. Many people are deciding to renovate and extend their homes rather than move someplace new, so why not join them?
The good news is that funding your renovation project may be easier than you think. Whether you’re planning to do a loft conversion or extending to make room for a new home office, remortgaging could be the ideal solution to cover the costs associated with renovating.
How do I remortgage to renovate my home?
A remortgage refers to the process of arranging a new mortgage with a different lender. If you're considering making home improvements, a remortgage allows you to access any equity in your home. This released equity can then be used to cover the costs associated with the renovation.
If you’re thinking of remortgaging to renovate your home, there are a few things you should consider. For example, if you want to leave your current mortgage deal before it ends, you may need to pay an early repayment charge. Find out if that’s the case before you make any decisions, as you’ll need to factor this into your budget.
You may also need to take other additional costs into account. Taking out a mortgage can involve paying a number of fees, including an arrangement fee, a valuation fee and a booking fee. These should also be included in your calculations.
Our expert team of mortgage advisers will be able to talk you through all of your available mortgage options, and any additional charges/costs you may incur.
What if I want to stay with my current lender to fund my renovation?
Another option you may want to consider pursuing to fund your renovation project may be to consider additional borrowing from your existing mortgage provider. This may be a good option if you’re tied into a fixed term mortgage and would need to pay early repayment charges if you were to switch deals before it ends.
However, we recommend that you speak to a mortgage adviser about what would work best for your individual circumstances before you make a decision.
What are the benefits of renovating?
One of the biggest questions you’ll encounter when considering a renovation is determining just how much value you could add to your home. As well as being able to create more space in your home for you to enjoy, renovating can also be a good way to climb the property ladder without needing to move (assuming that the renovation increases its overall value).
Bear in mind that the increased value of your home will entirely depend on the type of renovation you carry out. Some renovations can devalue your home, so it’s worth doing some research before you go ahead to make sure you’re not damaging your property’s market value.
For example, creating an extra bedroom can add a significant sum, especially if it has an en-suite. However, some extensions (such as extending your lounge area) can be less profitable, so you need to work out what your end goal is and determine whether the end result is worth it.
It’s recommended that you have a conversation with your local estate agent to determine your property’s current value, and its potential value once the work is complete. You can also research similar properties in and around your local area that have had similar works done and find out what they have sold for.
How else can I fund a renovation?
When it comes to funding your project, you should look at your overall financial situation first before you make any decisions. If you have savings that you can afford to put towards the renovation, you may consider using them. If you’re looking to remortgage, you could afford to borrow a smaller amount. Alternatively, you may choose to save the cash to pay to furnish your new space.
There’s plenty to think about, but as long as you do your research and weigh up the pros and cons, you’ll be in the best possible place to decide whether or not renovating is the right choice for you and your home.
If you’re thinking about remortgaging to fund a renovation, we’d be more than happy to advise. Give us a call and we can talk you through all your available options.
Important information
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
You may have to pay an early repayment charge to your existing lender if you remortgage.
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