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Remortgage for Home Improvements in Scotland

Home Improvements are a very common reason for our customers seeking help from our mortgage advisors. Often this is an ideal way to raise enough capital to develop your home or do any maintenance that may be required. Being a homeowner, it maybe that this is your ideal family home and you just need more space, but remortgaging for home improvements can be used for many reasons, such as decoration, extensions or developing on any land.

Remortgaging can be the most cost effective way to fund home improvements, but even with the current mortgage interest rates, can this be a viable solution? Yes, it can. The Mortgage Broker Scotland will search the mortgage market for you free of charge, without any impact on your credit score. Between a personal loan, credit card, savings or any other alternative, our mortgage experts will give you all the information you need to make the right financial decision for your circumstances and decide whether a remortgage is the best idea for you.



How does remortgaging for home improvements work?

The pandemic changed a lot of things for many people, but one common theme has been the value in your home, family, and priority in life balance. Of course many people now work from home some, if not all, of the week.

This, along with the unpredictable nature of the financial market, has led to many more people refinancing to fund developments of their own home, rather than move house.

Releasing money for home improvements through a remortgage is very straightforward, whatever your aim, for example building a home office. Just like any other remortgage process, the lender will take into consideration your income and outgoings and whether you have any dependents in order to work our your affordability.

Your mortgage adviser will cover all this for you and establish what amounts you may be able to borrow to pay for renovations or extensions.

Sometimes, if you go over a certain borrowing threshold with different lenders, they might ask for quotes and estimates for the work to help build the calculations for your remortgage rate.

What do you need to have to remortgage for home improvements?

  • Equity in your property:

There has to be enough between the value of your house and the amount you owe on your current remortgage. This is called your loan to value (LTV). For example if you house is worth £200,000 and your outstanding mortgage balance is £100,000, then you have 50% LTV. This means that you have £100,000 of equity in your property. Some lenders will allow you to borrow up to 95% of your property value, but not all are that generous.

  • Affordability:

Your mortgage adviser will help establish the affordability calculations required for you to achieve your goal and get the cash out the property you need. This will depend on your income and outgoings, along with the costs of the work that you are looking to do. The more you can afford and the more equity you have available in the property, the more chance you have of finding the best remortgage rate. Your credit history does not need to be clear, and it is possible to remortgage for home improvements with bad credit, but this may affect the mortgage deal available.

Depending on how much you are looking to borrow or the extent of the works you are looking to do, the lender is entitled to ask for estimates from builders to ensure that you your remortgage will cover the works that you are planning. Perhaps you’re changing your house from a three-bed to a four-bed, or adding on a larger kitchen. They just want to make sure it still is going to fit their loan criteria once it’s finished and the mortgage is sustainable.

Is it a good idea to remortgage for home improvements?

Remortgaging will always depends on your individual circumstances and the current mortgage you have on the property, but absolutely yes, remortgaging can be a very cost effective and affordable method to fund home improvements.

It is really important to make your decision based on all the options that the market has to offer and that is why it is always better to go through a mortgage adviser who can search the market for you. This can then be compared to other options you maybe considering and the interest rate that you may have to pay if you opted for say, a personal loan from a bank.

Our goal as The Mortgage Broker, is to always find you the best remortgage rate possible, and achieve your home improvements in the most affordable way possible.

A remortgage will give you a longer term with lower interest rates but it is important to be aware that if you don’t keep up with your new mortgage payments then there is a potential risk of losing the property – which wouldn’t happen on a traditional loan personal loan as mentioned above.

In some straight forward circumstances, you maybe able to release some cash, increase your mortgage term and only increase your monthly payments by a small amount.

Are there any alternatives to remortgaging for home improvements?

If you’re on a fixed rate deal currently, you could be left with a hefty early repayment charge. So instead of remortgaging, you could potentially request a further advance. This means staying with your existing lender on the main mortgage, and you borrow a little bit extra from them on a second part mortgage.

Again, it goes through affordability and loan to value calculations. But it means that you can borrow money with your existing lender and not have to pay an early repayment charge.

Also you could potentially take a second charge loan. Again, that means applying for a second mortgage – but these loans potentially have higher interest rates because they are more risky to the lender.

How much can I remortgage for home improvements?

Some lenders may have a certain threshold for how much you can borrow against the property. Most lenders set criteria on the Loan to Value – that just means how much the loan is against your current property value.

Some set this at 80% and some are now up to 90% as a maximum. That means you could borrow up to 90% of your property value for home improvements.

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How can a mortgage broker like the Mortgage Broker Scotland help?

We have access to over a hundred different lenders, so we can explore the market and find a lender whose criteria fits you and your situation. We also take away a lot of the stress of dealing with lenders.

Just now, current time frames for lenders are quite high so we can take the strain away – there’s no need for you to be on hold for an hour or two on the phone.  We can contact business development managers to make sure that you meet the criteria, plus we can do all the paperwork and mortgage application on your behalf.

Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it. There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 2%, but a typical fee of £495 is payable on offer.