Most homeowners occasionally get bitten by the interior design bug. Whether it’s a fresh coat of paint, widespread refurbishments or a major extension, there’s always something you can do to improve your home.
The key question being – how do you fund what can often be costly home improvements?
As an alternative to saving for months (or even years) on end, many homeowners consider remortgaging their property. A term that may sound a little daunting, but is actually surprisingly simple once you get to grips with it.
What is Remortgaging?
In essence, remortgaging your home refers to the process of taking out a secured loan with your property as collateral. Which is, at its core, what a standard mortgage is in the first place. The difference is that as you already have equity tied up in your home, it’s significantly easier to qualify for a remortgage product than a conventional mortgage as a first-time buyer.
The value of your home is assessed, you apply for a loan to cover the costs of your home improvements and repay the balance plus all associated borrowing costs as agreed. One of the benefits of a remortgage deal being the (typically) lower interest rates and borrowing costs than those of a comparable personal loan.
How Much Can I Borrow by Remortgaging?
It’s possible to borrow as little as £1,000 against your home, with no specific upper limits. It all depends on the value of your property, though many lenders cap remortgage deal maximums at around £500,000 or so. The value of your home and your current financial position will determine how much you are able to borrow.
When Can I Remortgage My Home?
Technically speaking, it’s possible to remortgage your home at any time. Many homeowners remortgage long before they’ve paid off their existing mortgage, in order to capitalise on lower interest rates and more agreeable terms elsewhere.
If looking to remortgage your home to fund property improvements, you needn’t necessarily wait until you’ve paid off your current mortgage. Your property can be used as equity at almost any time, so it’s simply a case of ensuring you can afford the repayments.
Affordability checks will always be carried out by the lender, so you need to ensure you’re in a decent financial position. You’ll also need to carefully consider the arrangement fees, interest rates and general borrowing costs incurred by re-mortgaging your home.
How Can I Find the Best Remortgage Deal?
Rather than approaching lenders directly, it can be useful to work with an independent broker. Also known as a mortgage advisor, independent brokers have the knowledge and experience needed to find the best lenders from an extensive panel of specialists across the UK.
There are hundreds of different types of remortgage products to choose from, which attach their own unique interest rates, borrowing costs and repayment terms. Only by comparing as many deals as possible can you be sure to find the best remortgage to suit your needs.
If you choose to work with a broker, make sure they carry out a ‘whole of market’ comparison on your behalf. Some simply compare deals from a set panel of lenders, which isn’t always helpful.
A Word About Price Comparison Sites…
Comparison websites can be great for gaining insights as to what’s on offer, but should also be approached with caution. The reason is that each application submitted by way of a comparison site will leave a lasting mark on your credit report. The more applications you submit, the more severe the damage becomes – even if your application is unsuccessful and you don’t enter into any agreements.
Once again, working with a broker means allowing an experienced specialist to assess your eligibility, beforegoing ahead and finalising your application. It’s also possible to enter into a secured loan agreement without credit checks being required.
As it becomes increasingly difficult to secure financial support from major banks and lenders, more homeowners than ever before are considering alternative options. Funding home improvements by way of a remortgage is an open and accessible option, but one that should be explored under advisement from an independent expert. – ukpropertyfinance.co.uk