Providing you have enough equity in your home and you can afford the repayments, remortgaging to pay for home improvements could be your best option. Releasing equity by remortgaging is extremely common because of the low interest rates compared to other forms of borrowing.
So, you love your home and you don’t want to move, but those ‘little ones’ are becoming a lot less ‘little’. Or maybe it’s time for that brand new kitchen to wine and dine (and impress) your friends? Or fancy a home gym? Games room? Office? There are so many possibilities.
With a simple remortgage, you can raise funds for your dream extension or home improvements easily, quickly and affordably.
How Much Can I Borrow?
You may be able to borrow up to 6 times your salary providing you have enough equity in your home, you can afford the repayments, and you have a high credit score; but this is the extreme rather than the norm. We now live in a world of responsible lending, which is a good thing, but it means the answer to this question will be unique to your situation.
Each lender has their own criteria and they’ll want to find out more about your finances before deciding how much they’ll lend you. They’ll also need to carry out a valuation on your property to figure out your loan to value.
Some lenders may want to see a breakdown of costs for the intended work, but we can advise you on the specific requirements for your lender during your free consultation.
Your credit score will affect how much you can borrow and at what interest rate. The lower your score, the less you’ll be able to borrow and the higher the interest rate. The higher your credit score the better your options.
During your free consultation, we’ll look at your equity, affordability, and credit score, so we can liaise with lenders on your behalf. Our mortgage team has access to the whole market of lenders, including some exclusive deals, so we’ll be able to find the most suitable offers available to you.
Will My House Increase in Value By the Same Amount I Spend on Improvements?
What we tell our customers is that any work done, assuming it’s of good quality, can enhance the value or saleability of the property.
This doesn’t necessarily mean the value will increase by the exact amount you spend on improvements, but it should help your property to sell down the line either way. The benefit of this shouldn’t be underestimated; being stuck in a property that isn’t selling when you’re trying to move on can be hugely disruptive, restrictive, and stressful.
Apart from certain exceptions, we advise you don’t remortgage for home improvements purely as an investment. Do it because you need the extra space or you want to enhance your living conditions. Instead of borrowing money to buy a bigger or newer house, and paying stamp duty and fees to do so, it often makes more sense to remortgage and upgrade your current home.
To summarise, the increase in value may not always be proportional to the amount you spend on improvements, but you can enhance the value or saleability of your property. Most importantly though, you’ll get to enjoy a bigger or newer home, and if you base your decision on this factor you’ll always be a winner!
