With a Remortgage, You Are Sitting On Top Of Your Own Chest Of Buried Treasure!
The housing market in the UK has been in the doldrums for a couple of years. House prices have fallen and a lack of mortgage finance has made it difficult for many people to secure the mortgages that they need to move home. Consequently, you may have decided to stay put and instead undertake improvements to your home. Renovation and redecoration can be as simple as a new lick of paint to your living room or as complicated as a significant extension.
One of the most common ways that you can raise the finance you need to undertake home improvements are to remortgage. You can move your mortgage to another lender to secure a good rate of interest whilst, at the same time, borrowing the additional funds you need to pay for your renovation or redecoration. And, once the work is completed, the value of your home could be significantly higher. If you are considering a remortgage to fund your home improvements, here are four things to bear in mind.
Find out how much you can borrow
One of your first steps when considering a remortgage to fund home improvements is to establish exactly how much you can borrow. This will typically be determined by the current value of your home, the anticipated value of your home when the work is completed, your credit rating and your income.
Accurately estimate the cost of the home improvements
You will need to carefully estimate the cost of your proposed home improvements at the outset. This will help you establish a budget and will also help you determine how much borrowing you need through your remortgage.
For example, if you are looking to replace your windows, consumer magazine Which? reports that it is not unusual to pay between GBP350 and GBP1,000 per window, dependent on the size of your windows. Research from channel4.com has shown that the average cost of a new fitted kitchen is GBP5,000 whilst a new bathroom costs GBP1,300 if you undertake the refit yourself or GBP3,250 if you employ a professional.
Establish a budget and stick to it. This will ensure that you have sufficient money through your remortgage to meet the costs of your home improvements.
Make sure you add value
If your aim is to increase the value of your home through the improvements, you should make sure that you are adding value through the work you do. It is easy to make your home more attractive and saleable to potential buyers; not so easy to actually increase its value.
For example, 2009 figures from Santander revealed that spending GBP7,700 on a bathroom adds just GBP2,892 to your homes value, whilst spending an average GBP22,600 on a loft conversion adds just GBP13,038. And, according to whatprice.co.uk, a new kitchen adds around 8 per cent to the market value of your home. This means that on a GBP150,000 property, you should spend under GBP12,000 to refit your kitchen. Whatever you plan to do, make sure you stick to your budget and be careful not to overspend on the work. By doing this you will ensure you maximise the value of your home.
Shop around for the best remortgage deal
When you have determined your budget and the extent of your home improvements, it is time to shop around for the best remortgage deal. Using an online comparison service is the easiest way to compare a range of mortgage deals to find the most suitable product for you.
Ask yourself whether you would like to benefit from the security and certainty of a fixed rate or whether you prefer the flexibility of a variable or tracker rate? Does the lender meet the remortgage costs such as valuation and legal fees? And, do you have the credit rating, loan to value and income needed for the particular deal you are considering?
About the Author:
James writes for Just Remortgages one of the UK's top sites for the latest remortgage rates and remortgage deals
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