Should I remortgage to make renovations?

by | Sunday 11th Apr 2021 | Mortgage Insights

Home renovations have recently become more than just a popular DIY activity, but more of an obsession, as we all try to improve the space in which we live.

Being at home so much has lots of us revaluating our dwellings and wanting to make the best of not going abroad recently; hot tubs, summer houses, outdoor heaters are all at almost out-sell out levels. It seems desire is strong for improvements and renovations … and the time is now.

However, if you don’t have a pile of cash lying around for home improvements, who are you going to turn to? Could a remortgage be a good idea to fund these improvements?

House prices are rising, with the main contributors being the Stamp Duty holiday, 95% mortgages for first-time buyers, help-to-buy schemes for new builds, not to mention the realisation from the majority of us that we’d simply like more space at home, now we’ve spent record amounts of time locked down in it.

Changing your whole lifestyle based on the fact that you now aren’t paying as much on your commute or work lunches, and you didn’t go abroad last year shouldn’t encourage a knee-jerk reaction. We are still in a transitional phase from a work point of view.

So, if buying something new isn’t necessarily the right option for you right now, how do we finance home improvements?

A personal question to consider is whether these are decorative improvements, like a new set of kitchen counters, or something more substantial like a downstairs bathroom or loft conversion. Some of these are nice to have, but don’t necessarily add value to your property, whereas some will undisputedly build you a bigger house with more assets.

New research by the online mortgage broker Habito found that 62% of homeowners are planning home improvements in 2021.

If your house needs significant repair and is categorised as uninhabitable, some lenders may be reluctant to offer you a remortgage. However, as long as your home is habitable you should have quite a few options.

A loft conversion is an extremely popular way to increase the square metre living space of a home. It can cost anything from £15,000, but in reality usually comes in at between £35-45k. Many people choose to remortgage to fund a loft conversion, as the interest rates are often lower than an external loan of the same value, and this may be  a smart financial move for you, too.

You might also think about having your property revalued  after completing the work since  a conversion will hopefully add value to your property. Remortgaging may offer you the opportunity of moving to a lower mortgage rate, since your mortgage will then be a lower portion of the property’s value.

If you’ve recently started a new job it can make applying for a mortgage, or a remortgage, a little more complicated as lenders may ask for additional paperwork to clarify your situation to the lender.

Beginning this process will require a new valuation of you home, and this may throw up other issues. For example, if your electrics don’t comply with current standards, then it may be that some of your funds will need to be directed towards that problem being fixed if your makes that a condition of your new loan. .

At Oportfolio we are professional advisers and are here to take the hassle out of the application process, making sure you have the best chance of getting exactly what you want, at the right rate and in your time frame.

A final thought…

Don’t ever scrimp on the tradesmen you’re engaging for the renovations you are have done. Regulations and appropriate sign-off will almost certainly be needed for major building works and if you cut corners, it can have major implications further down the line.

Get the best people you can afford, and you will give yourself the best chance of avoiding any regrets about taking on a larger mortgage and making those renovations dreams a reality.

Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority

Your property may be repossessed if you do not keep up repayments on your mortgage.

Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.

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