Remortgaging for Home Improvements

Whether you’re looking to revamp your entire property or overhaul one particular room, raising funds to improve the aesthetic of your home can come with a hefty price tag.

Remortgaging

Whether you’re looking to revamp your entire property or overhaul one particular room, raising funds to improve the aesthetic of your home can come with a hefty price tag. Aside from taking out a personal loan, it may be necessary to explore other options. Remortgaging for home improvements simply means you can release equity on your home by increasing the mortgage to an amount that will allow for your home improvements. Before you decide on your new kitchen colour scheme, there are a few things to consider: you must have equity in your home and you must be able to afford any repayments. It should be noted that any failure to make repayments means you risk losing your home.

Figuring out the best route to go down when remortgaging for home improvements is a case of assessing your current financial state and matching it up to a solution that works best for you and your desired changes. Providing you have equity in your property, remortgaging is a cheaper way of borrowing large amounts of money, making it a good avenue to explore when it comes to home projects.

However, it’s necessary to forecast the amount you will be spending and the work you intend to have done on your property, as this will determine whether it’s worth remortgaging for home improvement or whether you should explore a different avenue.

For example, your home is worth £425,000 and your current mortgage is £210,000. The new kitchen you want to start work on will cost £15,000. Therefore, you can increase your mortgage to £225,000 in order to fund your mortgage and your home improvements. It’s important to remember that you will need to make higher repayments over the full term of your mortgage.

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Second Charge Mortgage

Another option to consider when remortgaging for home improvement is a second charge mortgage. If you don’t want to alter your first mortgage to raise funds for home improvements, then a second charge or secured loan may be an option. Finding another lender to grant you a second charge mortgage means you keep each loan separate but also means you will need to make repayments for both mortgages simultaneously over a long period of time. The second charge rate may also be offered at a higher rate than your original mortgage so it’s imperative you work out if this is feasible.

Unsecured loan

If the thought of remortgaging for home improvements or taking out a second charge mortgage against your home fills you with a slight sense of discomfort, then you could look into exploring an unsecured loan. Approaching an outside lender means you will have fixed interest rates and your home wont be attached, eliminating any risks of repossession.

Things to consider when remortgaging for home improvements

The common denominator among all the methods mentioned, is the need for equity in your property. A simple calculation of subtracting your mortgage amount from the value of your property will tell you the equity you have in your house.

Remortgaging for home improvements means you will need repay a monthly sum, so being able to demonstrate you can afford to repay your monthly balance to the mortgage lender is necessary.

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