You have achieved the milestone of owning your house in the UK. Congratulations! But it doesn’t quite feel like your home yet? Are you looking to change the space, make it more yours? Doing renovations, decorations, and big upgrades – that’s where the real magic lies. Unfortunately, so does a big price tag. 

One popular way to fund these desires is through a remortgage for home improvements​​. But is it a good decision to release equity for house upgrades? Can you only do it for big changes? Can it invite financial trouble? Or are there tax implications? We know you have a lot of questions and we are here to address them all with a 101 guide on home improvement mortgage​. Let’s get started. 

Get Started 

Can I Remortgage for Home Improvements?

Yes, you can, if you have enough equity and if your financial profile is healthy with a good income and credit score. When you remortgage for home improvements, you are changing your current deal to a new one to release equity. 

People in the UK remortgage very commonly and for various reasons. Some do it for financial relief, others do it for buying a second home. Similarly, home improvements have emerged as a popular reason to remortgage. 

Note that remortgaging for home improvements​ may not be cost-effective if you won’t stay long enough to enjoy the upgrades, as fees could outweigh the benefits. Market conditions matter as well because if your property value is falling, you risk negative equity. 

How Can I Remortgage for Home Improvements?

Evaluate your property’s value.

Lenders will conduct a valuation to determine your home’s market price. The UK housing market is very dynamic, and constantly changing so your property’s value being different from when you initially bought it is expected. A higher value can increase the equity available for remortgaging.

Calculate the equity.

Take a look at your current deal and understand your equity share. Equity is the portion of the property you own. In other words, it is the difference between the home’s overall value and the outstanding mortgage balance. 

Understand affordability.

You need to calculate affordability yourself in order to understand if and how you can improve your application to prove that you can handle existing and new mortgage payments comfortably. 

Apply for a home improvement mortgage.

Lenders will assess your current financial situation similarly to a traditional mortgage. So keep your credit score and income in check to get the best possible terms.

Use released equity.

Once the process is completed, your lender will pay off your old mortgage and you will receive the additional funds. You can then use this money for your home improvements. 

Should I Remortgage for Home Improvements?

Now that you understand the basics, weigh these pros and cons to make an informed decision.

Advantages-

• Lower interest rates:  Interest rates on unsecured loans (personal or credit card) are usually much higher than on secured debts (remortgage for home improvement​).
• Property value boosted: Home improvements are upgrades to your property, so they also increase the property’s overall market value, leading to long-term financial benefits.
• Borrowing made flexible: Depending on your equity, you may be able to borrow a significant sum, which allows you to renovate more extensively.

Disadvantages-

• Costs involved: Different charges such as valuation fees and legal fees are in the play as well. If you are leaving your current deal early, you may have to handle early repayments as well. 
• Repossession risks: Failure to meet payment deadlines is a significant risk in any mortgage. While remortgaging is not inherently increasing this risk,  you will be tied to the financial commitment longer.
• Longer mortgage term: As you are borrowing more, you will be paying it off longer which may result in paying more interest in the bigger picture. 

What Home Improvements Shall I Do?

Upgrade your kitchen.

The kitchen is considered the heart of a home where meals are shared and memories are made. A kitchen renovation is both aesthetic and practical.

Modernise your bathroom.

A stylish bathroom is a symbol of luxury and comfort. It can add to your daily convenience with functionality. 

Add extra space.

You can do a loft conversion with an additional bedroom or living area, which also adds to the property’s overall value.

Decorate the outdoor area.

A patio or a deck can help create a visually appealing space. This can act as an area where you relax and connect with nature.  

Go energy-efficient.

Solar panels on the roof and insulations around the home go beyond being comfortable. They are smart financial decisions as they can reduce energy bills. 

Alternatives to Remortgaging for Home Improvements

Some other alternatives you can explore are: 

• Home improvement loans can offer you a straightforward way to fund your renovation ideas without the hassle of remortgaging.
• Personal savings can be used if your renovations aren’t too expensive in nature and are the least risky option as you aren’t borrowing anything or paying any interest later on.
• 0% interest credit cards are a fantastic option if you think you can pay back within the interest-free period, suitable for minor upgrades.
• For those over the age of 55, they can release some equity without selling or moving. This fund is tax-free and can be used to finance home upgrades but the downside is inheritance reduction as well as potential increased cost in the long run. 

Your financial situation and the scale of the upgrades you want play a huge role in deciding what route to choose. It’s recommended to seek advice from mortgage brokers to help you understand the complexities of remortgage for home improvement​ in details and open access to exclusive deals. 

Debunking the Myths

Some misinformation about home improvement mortgage​ causes people to take the wrong step or be hesitant to make the right decision. Therefore, we will debunk some of them so you know what you are doing with all the right information.

“Remortgaging can only be used for large projects.”

You can remortgage for small improvements too, as long as you have sufficient equity but it’s up for discussion whether going through the process of a remortgage for minor upgrades is worth it or not.  

“You will face a lengthy remortgaging process, full of hassle.” 

Remortgaging isn’t as slow as one may think. If you have taken the necessary preparations, you are good to go. Seeking advice and help can also clear out potential hassles.

“Remortgaging is always expensive.”

There are fees involved, surely but one of the most common purposes of a remortgage is the potential savings aspect. 

“You should only remortgage if you are in financial trouble.”

Remortgaging is a last resort for many but it can be so much more, it’s a strategic tool to access funds for significant decisions such as home improvements or buying a new home.  

Conclusion

Without letting a shortage of funds hold you back, you can also take your home game to the next level by remortgaging for home improvements. It could be your ticket to creating the dream space you’ve always wanted! 

Our team at UK Mortgage Finder has helped many remortgage for home improvements. We can find the best solution to your needs. With our guidance and insights, your dream home could be right around the corner.