Are you considering carrying out some long overdue work to your home? Remortgaging for home improvements is a way clients of ours carry out work to their home. Most lenders will allow you to raise funds in addition to your current mortgage balance, which will be paid out to you upon completion.
How does it work?
It’s one of the more common reasons why people raise additional money on their remortgage and the process is near enough the same as remortgaging on a like for like basis. If you’re coming to the end of a product you can apply for further borrowing, on top of your current balance, to fund work to your property. For example:
£200,000 current mortgage balance / £20,000 needed for a new kitchen
£220,000 new mortgage applied for:
£200,000 to repay the existing lender
£20,000 released to you on completion
Depending on the lender and the level of borrowing required, the process you go through to raise money for home improvements isn’t much different and is something we can discuss with you should that be of interest.
What if I’m currently in a fixed rate and need money to do home improvements?
If you’re currently fixed in with a lender, it still may be possible to raise further money to carry out home improvements. With some lenders, you may be able to apply for further borrowing or what’s commonly known as a further advance. This means your current mortgage product will carry on as normal and the additional money required will be on a new product with your same lender. Not every lender offers further advances and it will be subject to affordability, as well as your loan to value as to whether they’ll allow further borrowing. This is something we can provide further advice on.
What home improvements am I allowed to do?
Lenders will release extra capital for most home improvement reasons. The most common we find are new kitchens, new bathrooms, extensions or loft conversions. If the improvements intended are ‘non-structural’, then most lenders are ok and won’t require anything further from you before you start the work. If you are intending to do structural changes to your property, which may mean you temporarily move out, this can cause some issues with the lender. Ultimately, the property itself is the lenders security, therefore if structurally it is changing and for a period of time may be ‘unhatibable’, it’s unlikely a lender will be happy with you carrying out these works. There are alternative financing options should the build require a ‘heavy refurbishment’.
What do the lenders require?
Along with the usual applications required to apply for a new mortgage, some lenders may require quotes for the home improvements you’re looking to do. This can depend on the level of extra borrowing required and can vary depending on lender, however as a broker we’re likely to ask you for quotes OR a breakdown of the home improvements you’re intending to do.
How much can I borrow?
This will depend on your affordability, as with any mortgage. There may also be loan to value caps on how much you can raise, for instance the max some lenders will offer is 90% of the property value. This is something we will establish prior to going ahead with the mortgage application to ensure you’re getting a mortgage that suits your needs and circumstances.
If you have a mortgage product expiring in the next 6 months, now’s the time to start looking at your mortgage options.
Contact us on 01252 214044 or firstname.lastname@example.org.