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If you’re looking to renovate to add value to your property or need the extra space, remortgaging could be a way to pay for it. It’s a way to borrow money by setting up a new mortgage deal.
There are two options for borrowing money against the value of your home to make improvements. Both can be expensive, so think carefully and seek financial advice before you decide.
If you want to stay with your current mortgage lender, they may lend you more money. This will depend on how much of your mortgage you’ve already paid off and how much you can afford to repay each month.
They’ll also look to see if your home has risen in value and if you can afford higher mortgage repayments.
It’s important to know that the interest rate on the amount you borrow for home improvements may be different to the interest rate on your original loan.
As with remortgaging, any extra you borrow will be secured against your home.
You could look for a new mortgage deal with a new lender, asking to borrow more to cover your renovation costs.
For example:
Get quotes for the work you want to do so you know how much you’ll need to borrow.
If you borrow more, you’ll be paying interest on a higher amount over the full term of the mortgage.
You may get charged an early repayment charge by your existing lender. Check your mortgage agreement for any fees and charges involved.
Owing more on your mortgage may not seem like a big deal in the short term, but you need to think ahead.
If you were to have less money in the future, it may affect your ability to keep up with bigger mortgage repayments.
You’ll also be paying interest on the amount you have borrowed.
Before you remortgage, check whether your current mortgage deal has an early repayment charge.
You could be charged if you don’t read your mortgage agreement carefully.
While the work you want to do may seem like a good idea, home improvements won’t always add value to your home. It could cost you more than the value it adds.
Think about the types of improvements that could add the most value to your home. For example, turning a cellar into a living space, converting a garage into an extra room or updating your bathroom or kitchen.
Increasing the kerb appeal at the front of the house can also be a cheaper way to improve your home’s value.
If you are thinking of selling after you have done the work, research the market. You could also seek advice from an estate agent before you carry out any major building work.
Remortgaging isn’t the only way to borrow money for home improvements. Here are some other options.