Remortgaging for Home Improvement

Regardless of whether you want to revamp one particular room or your entire house, it’s no secret that the price of doing up a home can be really expensive. There is an option to take out a personal loan to cover the costs, but there are other options that you may not have considered previously.


Remortgaging for home improvement sounds complicated, but it simply means you can release equity on your home by increasing the mortgage to an amount that will allow for your home improvements. However, before you get carried away with paint tester pots and fabric swatches, there are a few things to consider: you must have equity in your current home to be able to remortgage and you must be able to afford the repayments, otherwise you risk losing your property altogether.

Deciding whether you should remortgage or not should be influenced by your current financial state, the amount of equity you have in your home and then matching them up with the best solution. Providing you have equity in your home, remortgaging is a cheaper way of borrowing a large amount of money, compared to taking out a personal loan.

Considering most home improvement projects require a large amount of money, remortgaging is a more suitable option. However, you should have an idea of how much money the improvements will cost and work out whether remortgaging will be worth it. For example, let’s say your home is worth £350,000 and your current mortgage is £190,000. The new kitchen you want to start work on will cost £12,000. Therefore, if you add your kitchen price on top of your current mortgage, the mortgage will increase to £202,000 in order to fund both your mortgage and your home improvements.

Naturally, the higher mortgage amount means your monthly mortgage payments will be higher, so you need to consider whether your income will allow for this.

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Second Charge Mortgage

If remortgaging for home improvements doesn’t seem like the right option for you, then you may want to consider a second charge mortgage. A second charge mortgage is a secured loan taken out by a homeowner against their current property as a way of raising extra money, such as to fund home improvements. It’s important to note that second charge mortgages are only an option if the borrower has at least 15% equity in their home.

Some people don’t want to alter their first mortgage in order to raise funds for home improvements, so they opt for second charge mortgage instead. 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. In a similar case to remortgaging, the payments on a second charge mortgage are likely to be a lot higher, so it’s important you are able to afford the increased monthly amount.

Unsecured Loan

If the idea of putting your home on the line in order to make improvements fills you will dread, then you could consider an unsecured loan. An unsecured loan is a personal loan that doesn’t take anything as collateral, so you immediately eliminate the risk of losing your home. However, in order to have an unsecured loan you must have a very high credit score, otherwise, you will be seen as too much of a risk to lenders.

Main Points to Consider

If you are thinking about remortgaging or a second charge mortgage to fund your home improvements, then you will probably need to have equity in your home, otherwise, getting an unsecured loan may be the route to go down.

Changing your mortgage or adding another loan to your finances means you will have to make sure you can afford the higher monthly payments, otherwise you may risk losing your home.

Your home/property may be repossessed if you don’t keep up repayments on a mortgage or any other debt secured on it.

Maple Leaf Financial Services is a credit broker not a lender.

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