Kitchen being upgraded after a remortgage

Why Should I Bother To Remortgage?

Remortgaging can help you to save money every month, and be a good way to get a lump sum of money, instead of taking out a personal loan.

What is a remortgage?

A remortgage is when you take out another mortgage on your home to replace your current loan or to borrow extra money against your property.

Why would you want to remortgage?

You would remortgage a property to either raise or save money:

Raise money

You can raise money by releasing equity in your home and taking out a new mortgage that is larger than your existing one. You could do this to consolidate debts, make home improvements or fund something else in your life.

Save money

You could save money by remortgaging and switching to a cheaper mortgage provider. You will need to check the terms of your contract though to make sure you aren’t charged any early exit fees.

How could you improve your home?

 

If you can release equity in your property, you can use these funds to improve your home and potentially increase its value. You may be able to build an extension, make repairs or update a property to raise its market worth.

This could prove to be a sound investment in the long-term, but we’d advise you seek expert advice before deciding to borrow money against your home.

What are the risks of remortgaging?

When you remortgage for a larger amount than your property is worth, you are borrowing more money against your home. If you borrow money and do not keep up with the agreed repayments, your home could be at risk.

If you feel you cannot commit to higher repayments than you are already on, we’d advise you consider remortgaging to release equity with caution.

When shouldn’t you remortgage?

You should not remortgage if your existing mortgage debt is small or if your property’s value has dropped. If your repayment charge is large or if you have little/negative equity in your property, we’d also advise you steer clear of remortgaging, as this won’t benefit you in the long run and could put you at a financial detriment.

Get advice today

If you are looking for expert advice on remortgaging your property, contact our team today. We will be happy to help advise you on what you can do to release equity and switch mortgage provider.

We are experts in offering solutions to people with bad credit and can help you if you need a helping hand with your next move. Visit www.clever-mortgages.co.uk today.

Family stood in loft conversion after home improvement loan

Making home improvements adding value to your home

With Easter just around the corner, now is a great time to start planning those home improvements you’ve been waiting to make. With our roads notoriously busy and holidays extremely pricey, the Easter break is the ideal opportunity to roll up your sleeves and get that much-needed DIY done!

The best types of home improvements

There are a number of improvements that can help to increase the value of your house. Looking at similar properties in the local area will give you an idea of what changes you can make and what effect these could have on the value.

Several types of improvements can add extra room space to your house, such as a loft conversion, basement room, extension, cloakroom or shower room.

The more obvious improvements, such as a conservatory and upgrading the kitchen and bathrooms can also add value. But it’s important to look at the cost alongside what extra value might be added.

For any building and electrical work carried out make sure you get all of the correct paperwork including planning permissions and works guarantees to help facilitate any future sale of the property.

A 2017 survey conducted by Which.co.uk showed the top 10 most common home improvements as;

  • Installing a new boiler or central heating system
  • Having a garden make-over
  • Installing double glazing
  • Building an extension
  • Knocking through rooms
  • Fitting solar panels
  • Getting a loft conversion
  • Adding an extra bedroom

Financing your home improvements

 Because major upgrades to your property can cost a lot of money, look at the cost of borrowing and how much you can afford to pay back each month. Two common ways to finance larger-scale improvements are remortgaging or taking out a second loan secured on your home. With interest rates being generally low at the moment, these two options are worth costing out and Clever Mortgages can help find the right deal for you from our comprehensive range of lenders. If you want to get an idea as to how much you could borrow, access our Mortgage Calculator.

If you’re looking to remortgage then check there are no early repayment charges (ERCs) for repaying your current mortgage and taking out a new one with a new lender. These charges are often applied during, and sometimes for a few years beyond, a special offer period. The new mortgage will need to cover this cost and the home improvements, but you’ll need enough equity in the property to do this.

If you have ERCs in force, then a second charge could be the best option as it could can be taken out without affecting your current mortgage. It could also have a different term so you can plan when you want to pay it off. If you are looking to make some changes to your home and increase its value, either to sell it in the future or for the quality of life, our experts can guide you through the process.

Remortgaging or taking out a second charge may be good solutions for some customers – however, they’re not suitable for everyone. It’s important to consider the long-term costs of raising funds in these ways, which can easily be reviewed with the assistance of an expert mortgage adviser. If you need to borrow a smaller amount of money you may be better off considering an unsecured product.

A woman redecorates her house after taking out a hoe improvement loan

The Best Ways To Fund Your Home Improvements

In order to afford the improvements, or perhaps protect our savings, most of us will have to use some form of borrowing, but it can be difficult to establish the best option for you. The most popular options for funding home improvements are remortgaging or a home improvement second charge secured loan, but you can work out what is the best option for you.

Remortgaging or taking out a loan

There is a multitude of options available when it comes to funding your home improvements, you just need to decide which one is the best for you. It’s important to remember that when it comes to borrowing money against your home, if you don’t keep up the regular repayments, you could lose your home and it’s vital to bear this in mind when considering remortgages or a second mortgage.

Remortgage to fund home improvements

During the process of paying off your mortgage, it’s likely that you will have a substantial amount of equity tied up in the value of your property. A remortgage is a process of taking out another mortgage on your home, to replace your current mortgage or to borrow money against your property.

For example, if your existing mortgage has £150,000 outstanding and you want £20,000 for home improvements, you may be able to find a mortgage lender willing to lend you £170,000 which can be used to pay off the existing mortgage and fund the work on your home. It’s important to remember that in doing so, you would be increasing the amount of borrowing that is secured against your home and you’ll also need to make higher repayments over the full term of your mortgage. How high the repayments of your mortgage will be, is largely dependent on what proportion of your property value the mortgage represents, your Loan to Value (LTV) and other fees associated with remortgaging.

When remortgaging might not be the best option

Remortgaging a property might work well for some, but it may not be the best option for everyone, especially if:

-Your mortgage debt is small
-Your repayment charge is large
-You have little equity in the property
-Your home’s value has dropped

Second charge secured loan

A second charge secured loan is another option available to keep your existing mortgage intact. So rather than approaching your existing lender, you find another lender who is prepared to grant you a second mortgage.

Secured charge loans are aimed at homeowners that are unable to get a personal loan elsewhere due to a non-existent or bad credit rating. Secured loans also work well for homeowners that are looking to borrow significantly more than an unsecured or personal loan. You would need to make repayments on both mortgages at the same time, which may be over a longer period than a personal loan.

Similar to a further advance, this option also involves increasing the amount of borrowing that is secured against your home and the second charge loan may also be offered at a rate that is much higher than of your first charge mortgage, so it’s best to figure out whether you can afford it or not beforehand.

As your home is used as security for the debt, secured loans may allow you to borrow a larger amount of money with a lower interest rate in comparison to unsecured loans. However, lenders do consider secured loans to be a greater risk to borrowers than an ordinary bank loan.

As a mortgage broker, we specialise in finding great deals on mortgages. We can also compare secured loans from our different lenders to provide you with the most suitable loan.

A further advance from your mortgage lender

You could also get a further advance from your mortgage lender by approaching them and asking if they are prepared to lend you more money. You might do this if your existing mortgage deal is a good one, or if you have significant penalties for terminating your existing mortgage. It’s also important to remember that any advance would be secured against your home and you would still need to pay back the extra money. Also, the interest rate you are charged on the additional borrowing could be different to your existing mortgage rate.

Unsecured loan

If you don’t want to secure any additional borrowing against your home, you can take out an unsecured loan. To obtain an unsecured loan you could try approaching a bank or other lenders. These types of loans typically have repayment terms of up to five years and they also have fixed interest rates so it’s easier for you to plan your budget.

Credit card

If the cost of your home improvements isn’t too high, you could consider paying on your credit card. This could be an attractive option if you can obtain a low-interest rate or even a card with a 0% introductory rate. It’s worth noting however that many of these 0% rates are indeed, introductory. It’s important that you make any repayments before the promotional period ends at the rate subsequently increases.