Remortgaging For Home Improvements

Straightforward mortgage advice from expert brokers. Finding the perfect mortgage just for you without the jargon. 

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Straightforward mortgage advice from expert brokers. Finding the perfect mortgage just for you without the jargon. 

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Remortgaging For Home Improvements, Vantage Mortgages

Remortgaging for Home Improvements

All about remortgaging for home improvements with Adam Messer.

How does remortgaging for home improvements work? 

When you remortgage to do home improvements, you’re normally borrowing extra money on your mortgage to do the jobs you want to do.

We move you from one lender to the next, and borrow more from the new lender than you owed on your old mortgage. The difference is there for the home improvements.

Let’s say you owe Nationwide £200,000 but you want to do an extension. We’ll go to a new lender, Santander for example, and borrow £250,000. That extra £50,000 comes to you as cash for you to do the work.

It does depend what kind of home improvements you’re going to do as to how much information we need to give the lender. If you want £10,000 to do your drive and decorate and have a new carpet, the lender’s not really going to ask too many questions about that.

If you want £150,000 to knock the side of your house down and build an extension, the lender is probably going to want to know a bit more, because it might affect their security. Their security is your house. So if you don’t pay the mortgage then they take the house to sell it. If you’ve knocked half of it down, that’s going to affect the sale.

What do you need to have to remortgage for home improvements? What criteria do I need to meet?

It doesn’t really matter what the mortgage is for, in terms of criteria. As for anyone getting a new or different mortgage, it’s all about your income and affordability. That will dictate how much you can borrow, regardless of how much your property is worth.

Let’s say your house is worth £300,000 and you owe £250,000 – so you’ve got £50,000 equity. You’re already close to 85% loan to value – so we can borrow a little bit more if the affordability is there.

But if you want to borrow another £100,000 we can’t do that, because you’d owe more than your house is worth. Even if you want to double its size and it will end up being £600,000 by the time you’re done, you can’t borrow that money now. It’s got to be secured on the house in its current state.

There’s plenty of information on our website and podcasts about how much you can borrow and what income we do and don’t use. Credit history is also a factor, as with any mortgage.

Can I remortgage for home improvements with bad credit?

Generally the answer is always yes, depending on how bad the credit is and your whole situation. What we tend to do is get a copy of your credit report so we can see exactly what’s on there and how bad it is.

If it’s just a few missed payments a couple of years ago, that’s not going to cause us too many problems. If it’s bankruptcy last month, that’s a bigger issue. It also depends on Loan to Value – how much mortgage we’ve got compared to the property’s value and how much more we want to borrow. But bad credit on its own isn’t a factor that would stop you doing this.

Can I remortgage my Buy to Let for home improvements?

Yes, you can. Not with every lender, but some will allow it. It depends whether it’s home improvements on the Buy to Let property – that’s fine. If you’re raising capital on your investment property to do home improvements on your own home, or a different property, that’s fine too.

At the moment in early 2024, lenders’ stress tests are quite tricky for Buy to Let, so often we can’t get as much as we used to from a Buy to Let property. So that is a factor. But in principle there’s nothing to stop you remortgaging your Buy to Let for home improvements as long as the rental stress test works to increase that mortgage.

Is it a good idea to remortgage for home improvements? What are the pros and cons?

Most home improvements will be adding value or saleability to your home, so I never have much of a problem adding that on to your mortgage. I don’t tend to encourage people to add money onto mortgages for holidays, weddings and cars.

But with home improvements it’s very different because you’re upgrading your home. Because your mortgage is secured on your home, the more it’s worth, the better. It’s almost always a good idea.

In terms of the ways to fund it, it depends how much you need and what you’re doing. If you want a new kitchen for £7,000 and the company offers you five years 0% interest-free credit, you might want to do that – as you’re not paying any interest on it. It all depends on your individual circumstances.

In terms of cons, the only thing really is that you’re increasing your mortgage. You’re going to owe more. But if you’ve increased the value of your home then that doesn’t really matter.

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Are there any alternatives to remortgaging for home improvements?

It’s quite a niche thing, so not really, but I did just mention the kitchen credit. If you can get 0% finance on something then that’s better than paying interest, as long as you can manage the monthly payments.

Putting it onto your mortgage over 25 years is going to cost a lot less per month, but will cost a lot more in the long term. You’re paying interest over a long period of time. If you’ve got the cash to just do it, that’s better than adding it to the mortgage.

There is another alternative. I’ve been talking really about changing lenders – we haven’t really factored in the options of a second charge or a secured loan. If you’re partway through a five year fixed deal at 2%, you won’t want to come away from that lender to borrow more at a higher rate.

But you could do a second charge or a secured loan. It’s like a second mortgage. It has a slightly higher interest rate than a normal mortgage, but it means you don’t have a penalty to leave your current lender.

It’s a similar thing to remortgaging and we’d always look at that option as an alternative to consider.

How can a mortgage broker help?

Use a mortgage broker, because we know the best lenders to go to. We know the criteria. We know how much you’re going to be able to borrow and add on.

We can also compare moving lenders with staying put and taking a second charge. If you go to your lender, they’re only going to look at their own criteria. If you don’t quite meet their requirements to borrow extra money – which a lot of the time people don’t – we’re best off moving lenders. To do that, you need a mortgage broker to find the most suitable deal for your situation.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up with your mortgage repayments. 

You may have to pay an early repayment charge to your existing lender if you remortgage.  

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