Remortgaging for Home Improvements
On this episode of the mortgage and protection podcast, we’ve got James Taylor from Yellow Brick Mortgages to answer your questions on Remortgaging for Home Improvements.
What is Remortgaging for Home Improvements?
Typically clients are on Fixed-rate mortgages, and at the end of those fixed rates, they consider their remortgage options, because not taking action would result in them reverting onto their lender’s variable rate.
One option many people look at, is the potential to secure a better rate of interest. It may also be that they’ve been considering a loan to carry out Home Improvements, in which case, it may be possible to release equity from your home during a remortgage, to carry out those improvements.
What sort of Home Improvements could you carry out by Remortgaging?
It could be for a variety of different reasons, from simple decoration to a large project, like a kitchen refit or an extension. Lenders would generally support you to do that, provided the equity and affordability is sufficient.
Have a lot more people done Home Improvements due to the pandemic?
There’s certainly been an influx of enquiries around considering staying where you are as opposed to moving home. People want to raise money to do Home Improvements and builders are now having problems sourcing certain materials due to the sheer number of people considering doing that. Also there has been an increase in people looking to work from home, so garden offices and garage conversions to home offices have become very popular.
What do you need to have to Remortgage for Home Improvements?
Aside from owning your own home, you would need to have sufficient income to raise enough money to do what you need to do. You also need to have equity in your home, which is just the difference between the value of your home and the outstanding balance on your mortgage.
If you have equity, you can release some of the money to do what you want to do. Having a Mortgage Broker to explain the process would always be a good idea, to initially find out if this is a possible option for you.
Is it a good idea to Remortgage for Home Improvements?
The pandemic seems to have given people the realisation that instead of moving to a larger home, they could utilise what they already own and improve or extend on that. That could be a good reason for staying where they are.
It could also be that they can secure a better mortgage interest rate, which is very low at the moment, so that’s a good way of saving money. Of course you’re also adding value to your home, which is really important to consider in the grand scheme of things.
Can I take equity out of my house for Home Improvements?
You can release equity from your home to raise the money for Home Improvements. Typically, when you look to remortgage, you would speak to a Mortgage Broker, who would look at your current level of equity, and advise you of the maximum you can borrow, or release from your home.
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Are there any alternatives to Remortgaging for Home Improvements?
Moving house is certainly an option, but there are different ways of financing Home Improvements, rather than Remortgaging. If you’re only halfway through a Fixed-rate term, for example, there could be penalties incurred for exiting your mortgage to Remortgage.
Another option to consider is a further advance, which is asking the lender that you’re currently with to see if they would look at increasing some additional borrowing to your current mortgage. There is also the option of a Secured Loan, which is just a second loan on your property, or a personal loan, which doesn’t have any bearing on your property. It’s important to weigh up all the options available to you, and make an informed decision.
What factors will be taken into consideration when Remortgaging for Home Improvements?
Affordability of the mortgage is key, so when you approach a mortgage broker to consider what maximum amount you can raise, the mortgage has still got to be affordable from the lender’s point of view. They would therefore look at your personal circumstances, such as income and expenditure and credit history.
Other things that will be considered is the type of property you own, it’s location, condition and value, as this will dictate how much you can borrow.
How much can you Remortgage for Home Improvements?
It will depend on individual circumstances, but the maximum you could borrow would be up to 95% of the value of your home. If you’re raising money to improve your home, it will improve the value, so lenders would be more inclined to look at lending you more than if you were maybe considering using the money for debt consolidation.
How can a Mortgage Broker like Yellow Brick mortgages help somebody looking to Remortgage to do Home Improvements?
The first step would be for the broker to learn and fully understand the client’s circumstances. It can be difficult to understand whether a lender may help you or not. A broker would understand the criteria that lenders work with to determine whether they can help you. We can also support and help through the process to completion. If you’re thinking about Remortgaging to improve your home, we would be happy to help with that.
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