When you own a home, your needs and desires can change over time. You may get to a point where you want to make some improvements to your property. Perhaps you even want to alter the layout. It’s important that your home looks and works the way you need, both now and further down the line. Sometimes, this will mean a significant amount of work needs to be done. A new bedroom might be needed for a new arrival, the roof might need replacing, or you may wish to extend or introduce a loft conversion simply to add value.
The reason many remortgage for home improvements
Property experts will tell you that it is far more cost-effective to renovate rather than relocate. Adding new bedrooms and bathrooms costs less than buying somewhere new, and it can add value to your property.
Nevertheless, such home improvements do require an investment of capital. When the home improvements project you are planning is extensive, the cost can be quite significant.
Once you have committed to undertaking a home improvements project, it’s important that you establish the cost of your plans. To do this, you should source a number of quotes to find the right price. The scale of your project will be the main factor that impacts price, and the pricing aspects will include things like:
- Planning permission
- The architect’s fees
- Labour costs
- Backup funds in case something goes wrong
Once you have a clear picture of the amount of money the home improvements will require, you are ready to explore the options for funds. This is where many people choose to remortgage for home improvements.
The finance options and borrowing on a mortgage for home improvements
Most people find there are two main solutions for acquiring the necessary capital to fund a home improvements project. These are a secured loan and a remortgage for home improvements. There are advantages and disadvantages to both.
With a personal secured loan, you have a resource to borrow the large sum of money required for an extensive home improvements project. As is the case with a mortgage, the collateral in this type of loan will be your home. This means that your property is at risk if you fail to make the repayments in time.
When considering a secured homeowner loan, you should carefully examine the repayments. If you think there would be a risk that you might struggle to pay them, you should be very cautious. Failure to make payments will not only put your home at risk; it will also harm your credit rating.
At Think Plutus we can help you explore the option as it is highly recommended that you consult an expert for guidance. It is important that you fully understand the costs of the loan to ensure you can make the repayments comfortably.
Remortgage for home improvements
This is your other main option for securing funds. It is a process that involves remortgaging your property in order to release equity. Equity is the difference between the value of your property and the current mortgage balance.
For example, with a home valued at £300,000 and a mortgage balance of £200,000, you have a substantial equity of £100,000. Be advised, however, that the vast majority of lenders will not allow you to take all of the equity out of your home. They will usually work off your home’s value when you make the application.
Secured loans vs. remortgaging
The main difference between a remortgage for home improvements and a secured loan, with the former, all payments you make will be with the same lender. In most cases (though not all), this will mean that the repayments will be lower, as the loan is with a single provider.
A secured loan provider will make an assessment of your affordability in a different way to a mortgage provider. This will possibly be more favourable, increasing your chances of borrowing the sum of money that you need. In many cases, a secured loan provider will take a more lenient view of your credit score when they assess your application.
There are pros and cons to both options, and no two situations are the same. Again, we recommend you seek advice from an expert with a strong understanding of the market. This will help you make the right decision.
Remortgage for home improvements advice
If you have decided that the best option for you is to remortgage for home improvements, you have some researching to do. There will be various rates and mortgage plans available. Perhaps it will be most cost-effective to go with your current mortgage provider, or perhaps another provider will offer you a better deal.
In any case, you need to perform a comprehensive comparison of all the options available to you. We recommend you contact the team at Think Plutus because we have a wealth of knowledge and experience, as well as the ability to access exclusive rates that won’t be found on the general market.
With whole-of-market access, we can guide you through the entire process to identify the option that will work best for you. If you’d like to know more about how we can help you remortgage for home improvements, contact us today.