Can I Remortgage to Fund Home Improvements?

Remortgaging allows you to release equity in your home to finance home improvement projects and renovations.

Remortaging is when you move your existing mortgage to a new lender while staying in the same property. The new mortgage will then replace your old one.

If you move to a different mortgage but stick with the same lender, this is called a “product transfer.“

Some of the pros and cons to keep in mind include:

Reasons to use

• You can spread the payments over a longer period of time
• If you extend the length of your current mortgage deal your repayments might stay roughly the same
• If you switch to a new provider you might get a better mortgage deal than the one you’re currently on
• If your current mortgage deal is already coming to an end then remortgaging could help find a cheaper fixed rate offer

Reasons to avoid

• There’s a chance you could pay more in mortgage interest when you borrow more
• You might have to pay a penalty if you leave an existing mortgage deal before it ends
• It could take longer to repay your mortgage
• You might not lock in a better deal than the one that you’re on

There are several factors that could impact the total cost of your remortagging deal:

• legal fees
• early repayment charges
• valuations
• booking and arrangement fees
• product fees

The fees you’ll need to pay vary between providers, so it’s important to understand what’s included when you compare remortgage deals.

The remortagging process generally follows these steps:

1. Find out how much you need
You’ll need to work out how much your home is worth and check how much money you still owe on your mortgage.

2. Compare mortgage deals
Once you have an idea of how much you’ll need, start comparing mortgage deals. Remember to look out for any fees you’ll need to pay.

Price comparison websites are a great place to start.

You could also consider a mortgage broker to help you find suitable deals, however, this often comes with a fee.

3, Apply for a deal
When applying for a mortgage deal you’ll need to follow the lender’s process and provide ID and documents to support your application.

This includes your passport, recent bank statements, household bills, proof of your existing mortgage and the value of your home.

4. Complete your remortgage
The lender will review your application and contact you with their decision or if more information is needed.

Your lender will also carry out a full credit check and arrange for your home to be valued. You’ll need a solicitor or conveyancer to handle the transfer of your mortgage from one lender to another.

Remortgaging could help you find a more competitive deal if your existing mortgage is coming to an end.

That’s because you might be able to lock in a cheaper rate with another provider.

If your current mortgage deal isn’t ending any time soon it’s important to check whether you might need to pay additional fees such as early repayment charges if you switch before it ends.

Before remortgaging really consider the following:

1. Your circumstances: can you afford higher monthly repayments if interest rates increase?

2. Financial benefits: does moving to another provider offer more advantages than staying with your current lender?

3. Your credit history: lenders will look at your credit history to decide whether or not to approve your mortgage application, so it’s worth checking yours and improving your credit score where possible.

Alternative ways to finance your home improvements include:

• savings or investments: using money set aside in your savings accounts, cash ISA, Stocks & Shares ISA
• credit card: using a 0% purchase credit card could help you access finance at a cheaper rate of interest and pay it off within a certain period
• personal loan: a loan could help you borrow larger sums of money for bigger home improvement projects

Remember, if you decide to borrow money to finance your home improvements, it’s important to ensure you can afford the repayments.