Our guide to Remortgaging for Home Improvements

As a homeowner, there may come a time you wish to carry out some improvements to your property. This could be to ensure your home is looking and functioning well now, and in the future. Or it might be that you have considerable work to do to get everything working properly.

By remortgaging, you can release the equity in your property and carry out these changes.

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Author: Carl Shave - CEO and co-founder
Last updated: 16 Jul 2024

Can I remortgage my house for home improvements?

Yes, it’s possible for almost anyone to do so. Although there are two main requirements. Firstly, you will need to ensure that enough equity has been built up in your home. And secondly, you’ll need to make sure that you will be able to keep up with your new monthly payments.
If the criteria are met then there shouldn’t be any issues, providing your lender agrees too. A common element people forget are early repayment charges or ERCs. These are costs imposed on some mortgage terms by the lender. If applicable, you will have to pay a fee for leaving your current mortgage term early.

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How do I remortgage for home improvements?

So, how does remortgaging for home improvements work? There are generally two solutions to getting this lump sum of money. You can take out a secured loan or remortgage to release equity for home improvements.

Secured loan

A personal secured loan can give you the chance to borrow large amounts of money. As with a regular mortgage, the guarantee against non-payment is your home. Therefore your property is still used as the security.
It is essential that you look at the repayment amount to ensure that you will be able to pay. If you fail to maintain your payments, your credit rating could be affected, or you could potentially still lose your home.
There are plenty of loan comparison websites available, but it is also advisable to speak to an expert for guidance. Especially to ensure that you understand the full costs of the loan and can comfortably afford the repayments.

Home improvement remortgage

A remortgage for home improvements is the other main option. The home improvement remortgage process involves remortgaging your property to release the equity in it, i.e., the difference between the property value and the current mortgage balance.

For example, if your home’s value is £200,000 and your current mortgage balance is £150,000, you have £50,000 of equity. Do note that lenders don’t usually permit you to take all of the equity out of your home. Furthermore, they will typically work off the value of your home at the time of the application.

What home improvements can I make?

There are a range of house improvements that can be made. Here are some of the most common improvements:

  • Extensions
  • Garage conversions
  • Renovating the garden
  • Loft conversion
  • A new bathroom
  • New windows and doors
  • New roofing
  • A new kitchen

Remember, if you’re ever unsure about the improvements you want to make, reach out and we can help answer your questions

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Calculating home improvement costs

Rather than moving, some property experts suggest that it’s more effective to improve your current home.

Unfortunately, like many things in life, these home improvements come at a cost. Depending on what work that you are planning on having done, this can be a significant amount of money.
Once you have decided that you want to make improvements, you’ll first need to work out the proposed cost. This might involve getting a number of quotes. Depending on the scale of your improvements or alterations, some of the pricing aspects that should be considered include:

  • Architect’s plans and services
  • Planning permission
  • The cost of builders
  • Materials
  • Building regulation inspections
  • VAT
  • Having some money put aside just in case things do not go to plan

Once you know exactly how much money you need, start investigating your options of how to get it.

The main difference between a home improvements remortgage and a secured homeowner loan is that the payments will all be with the same lender when you remortgage and, although not always the case, as the loan is with one provider rather than two, the rates and in turn the repayments could be lower.

It is invariably the case that a secured loan company will assess your affordability in a different and possibly more favourable way to a main mortgage provider. This may be the difference between you borrowing the amount you need or not. A secured loan lender may also have a more lenient view of your credit rating when assessing affordability.

Both options have their pros and cons, and every situation is different. Therefore it’s recommended to speak to an expert who understands this market.

There are several things to keep in mind when looking to remortgage for home improvements. The first is that you should make a clear plan about your desired renovations or improvements. This will allow you to have an accurate budget.

Next, you’ll need to do your research. Look around to see what lenders are available and what rates they offer.

Questions you should ask yourself are: should I look for a new lender? Or is it cheaper to stay with my current lender? This will ensure you are making the best financial decision.

Working with a specialist broker can help take some strain off you during the process. Our team at Just Mortgage Brokers can advise you throughout your journey. Reach out today and one of our specialists will be in touch.

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