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Can you Remortgage For An Extension?
When it comes to home improvements, most of us are limited by what we can afford. But what if you could find a way to get around those limitations? In this post, we'll explore the possibility of remortgaging in order to fund an extension on your home. Read on to learn more!
Not only will an extension give you extra space, but it can also add value to your property. However, extensions can be expensive and you may not have the money available to pay for one upfront. This is where remortgaging comes in.
Remortgaging is the process of taking out a new mortgage, sometimes with a different mortgage lender, in order to replace your existing one. You may be able to do this if you have built up equity in your home.
How does remortgaging for an extension work?
If you're a homeowner, you may be able to remortgage your property in order to raise the funds for an extension.
It's important to remember that remortgaging is a big financial commitment and it's not something to be entered into lightly. You'll need to weigh up the pros and cons before making a decision. If you're thinking of remortgaging to fund an extension, here are a few things to bear in mind:
- The process of remortgaging can be complex and time-consuming. You'll need to shop around for the best deal and go through the application process all over again.
- You'll likely have to pay fees and charges associated with taking out a mortgage, such as valuation fees, legal fees and arrangement fees.
- Your monthly payments are likely to go up assuming you are borrowing additional funds.
- If you have a fixed-rate mortgage, you may have to pay early repayment charges if you remortgage before the end of your fixed term.
- It's worth getting professional advice before making any decisions about remortgaging. A mortgage advisor (like our experts at Teito) can help you understand the process and find the best deal for your circumstances.
Is remortgaging for home improvements a good idea?
Remortgaging to finance home improvements, such as a house extension, can be a good idea if you're struggling to afford the costs upfront. Depending on the type of work you're doing, home improvements can add thousands to the value of your home, so it's worth considering this option if you're looking to add value to your property.
However, it's important to remember that remortgaging is a big financial commitment and it's not something to be entered into lightly. You should consider your personal circumstances and how long you're planning to carry on living in your home before making any decisions.
Do I need to tell my mortgage lender if I build an extension?
Yes, you should notify your current mortgage lender if you're planning to make any changes to your property, such as building an extension.
You should also contact your insurer to check if you'll be covered during the work. You may need to get more insurance during and even after the work is complete.
Can I remortgage to fund home improvements?
Yes, it is possible to get a remortgage to release equity in your home to finance improvements to your home. The answer to this question depends on a few factors, such as the equity in your home and your credit score.
If you have enough equity in your home and a good credit score, you may be able to remortgage for building work or other improvements. However, if you do not have sufficient equity or your credit score is not good enough, you may not be able to remortgage, at least for the time being.
How much equity do I need to remortgage for home improvements?
The amount of equity you need to remortgage for home improvements will depend on the value of your home and how much you want to borrow. Generally speaking, you'll need at least 20% equity in your property in order to remortgage.
The best way to find out if you have the right amount of equity in your home is to get it valued. Once you know the value of your property, you can then work out your equity.
If you're thinking of remortgaging to fund an extension, it's important to speak to a mortgage broker first. They'll be able to tell you how much equity you need and whether or not you're eligible to remortgage.
Permitted development or planning permission?
You may be able to make certain changes to your property without needing full planning permission.
However, there are some restrictions and limitations in place. For example, you may only be able to build a single-storey extension or you may need to adhere to certain size limits.
Find a better remortgage deal with Teito
Financing a loft conversion
A loft conversion can significantly increase your property value while also providing extra living space. As well as the actual building work, you may also need to factor in the cost of professional services, such as an architect.
If you're thinking of turning your loft into a bedroom, office or playroom, you may also need to apply for permission.
In terms of financing a loft conversion, you have a few options available. You could take out a home equity loan, remortgage your property or take out a personal loan. The best option for you will depend on your personal circumstances and the amount of money you need to borrow.
Getting a home improvement loan
If you're planning to make home improvements but don't think you'll be able to remortgage, there are other options available to you. Home improvement loans are becoming increasingly popular and there are a number of different products on the market.
In smaller amounts, they may be provided in the form of an unsecured loan, meaning you won't need to put your property up as collateral. However, for larger amounts, loans are typically secured against your property.
As with any loan, it's important to compare the different home improvement loans available before you make a decision. Some things you may want to consider include the interest rate, repayment terms and whether or not you need to provide security.
Applying for a secured loan
Secured loans are backed by your property. This means that if you default on the loan, your lender could repossess your home.
Secured loans tend to have lower interest rates than unsecured loans, but they're not suitable for everyone. If you're thinking of taking out a secured loan, make sure you can afford the monthly repayments as well as your other financial commitments.
With a secured loan, you should also be aware that if you miss payments, your home could be at risk of repossession.
What if I've got a bad credit history?
If you have a bad credit history or adverse credit, you may struggle to remortgage or get the finance you need for an extension. This is because mortgage lenders will be reluctant to lend to you if they think there's a risk you'll default on the loan.
Your best chance is by getting independent mortgage advice. A mortgage advisor will be able to recommend the right mortgage and secured loan providers, many of whom specialise in lending to people with bad credit.
This is a big financial commitment and it's not something to be entered into lightly. It's important to get advice from an experienced mortgage advisor who can help you find the right deal for your circumstances.
Getting a further advance to finance home improvements
If you have a mortgage with your current lender, you may be able to apply for a further advance. This is an additional loan that's added to your current mortgage deal.
Further advances can be a good way to finance home improvements, but they're not suitable for everyone. You'll need to have equity in your property and pass a credit check in order to apply for a further advance.
You should also be aware that further advances typically have higher interest rates than your original mortgage. This means you could end up paying more interest over the term of your loan.
Before you apply for a further advance, make sure you compare the different options available to you. You may be able to get a personal loan with a lower interest rate, or you could remortgage to a new lender.
Speak to a mortgage expert
If you're thinking of funding home improvements and need help finding the right financing option for you, speak to a mortgage broker. They'll be able to compare the different options and find the best deal for your circumstances.
At Teito, we work with hundreds of mortgage lenders including those who specialise in remortgaging for an extension or other improvements. We've transformed the mortgage process to make it as stress-free and streamlined as possible, and our expert advisors are there every step of the way.
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