Remortgaging for Home Improvements
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Remortgaging for Home Improvements
How does remortgaging for home improvements work?
Firstly, it’s important to clarify what remortgaging means. Put simply, it’s when you move your mortgage from one lender to another. As part of that process, you can look to borrow additional funds.
One of the most common reasons for borrowing additional funds is for home improvements, and that’s widely accepted by lenders. Your advisor would obviously ascertain whether the amount that you’re looking to borrow is affordable for you, and check that the lender is happy with the type of work you’re looking to carry out.
Assuming the lender is happy and you can borrow the amount you’d like, the additional funds will be released to you following the legal process known as conveyancing. That’s carried out on your behalf by a solicitor.
What do you need to remortgage for home improvements? What criteria do I need to meet?
It’s best to start with a rough idea of how much money you’re going to need to complete the work, and whether you can fund any of it from your own savings.
The main element of criteria is the affordability check by the lender, to ensure you can comfortably borrow the additional funds, plus checking how those funds will be used.
What factors will be taken into consideration when remortgaging for home improvements?
Lenders usually like to know what sort of home improvements you’re looking to carry out. They might request invoices and a breakdown of works, to show how the funds will be allocated.
If you’re making structural changes to the property, the lender might want evidence that you have the relevant planning permission in place, and potentially drawings. That will come down to the specific type of work you’re looking to carry out.
As I’ve mentioned, affordability plays a huge part in whether it’s possible to raise funds against your property. Alongside this is the Loan to Value – the amount of borrowing compared to the value of the property. It’s how much equity you’re leaving.
Lenders have a maximum Loan to Value when raising monies, usually 85% to 90% of the property value. Again, that will vary depending on the lender. If you’re already at this level of borrowing on your existing mortgage, you may not have much scope to raise additional funds. Again, your advisor can check all of that over and let you know what’s possible.
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Can I take equity out of my house for home improvements?
Yes, if you have equity in your property, it’s something you could certainly look at doing. Again, the Loan to Value criteria is key. Remember that the new loan will be subject to new affordability checks, credit scoring and the lender’s general criteria. Your advisor would help you navigate all of this and explain your options.
Can I remortgage for home improvements with bad credit?
Yes. Lenders will consider mortgages for applicants with bad credit, although this is quite a broad term. It does depend on the severity and the type of bad credit that you have. Your advisor would check this over and advise you. It’s certainly a possibility.
Can I remortgage my Buy to Let for home improvements?
Yes, this is something you could look at. A Buy to Let is assessed differently, as the affordability is predominantly based on the rental income generated, instead of your own personal income and expenditure.
Is it a good idea to remortgage for home improvements? What are the pros and cons here?
It’s predominantly a matter of opinion and will depend heavily on the individual circumstances. If it makes financial sense, it’s certainly a good outlet, especially if the works will add value to the property and create equity for you.
Of course, additional borrowing brings costs, so it needs to be financially plausible. But if it makes your home a better place for you to live, it’s a good avenue to explore.
Are there any alternatives to remortgaging for home improvements?
Remortgaging isn’t always the most cost-effective way to raise funds on your home. You might be currently fixed into a rate with an early repayment penalty if you exit early.
As an alternative, you could look at borrowing the additional funds through a Further Advance with your existing lender, which essentially adds a second part onto your current mortgage.
You’d be staying with the same lender, but borrowing additional monies from them. As with a remortgage, it would be subject to brand new affordability checks.
A remortgage to a different lender might not always be the most cost-effective solution, but that’s where advice would come into play. We would help you weigh up the options to find the right route for your circumstances.
How else can a mortgage broker help here?
An advisor essentially is here to assess all the options available to you and offer advice on the right route forward. It might be remortgaging to a new lender, or borrowing additional money with your current lender.
We can look at all the options available to you and let you know the right and most cost-effective route for your own circumstances.
If this is something you’d like to explore, please reach out. We’d be more than happy to take a look, provide advice and let you know exactly what options you may or may not have.
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT.
THE FINANCIAL CONDUCT AUTHORITY DO NOT REGULATE SOME FORMS OF BUY TO LET.
THERE MAY BE A FEE FOR MORTGAGE ADVICE. THE PRECISE AMOUNT OF THE FEE WILL DEPEND UPON YOUR CIRCUMSTANCES, BUT WILL RANGE FROM £99 TO £549 AND THIS WILL BE DISCUSSED AND AGREED WITH YOU AT THE EARLIEST OPPORTUNITY.
ASSET HARBOUR MORTGAGE AND PROTECTION LIMITED TRADING AS ASSET HARBOUR MORTGAGE AND PROTECTION ARE AN APPOINTED REPRESENTATIVE OF HLP PARTNERSHIP LIMITED, WHICH IS AUTHORISED AND REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.
