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July 8, 2022

Remortgaging for Renovations & Home Improvements

Remortgaging for Renovations and Home Improvements

Looking to renovate your home? Whether you're planning a simple update or a complete overhaul, a renovation mortgage could help make your dream home a reality.

What is a renovation mortgage?

A renovation mortgage is a type of loan specifically designed to finance home improvements. Like any other mortgage, the loan is secured against your property, which means that if you default on the payments, your lender could repossess your home.

However, unlike a standard mortgage, the loan amount is based on the value of your property after the renovations have been completed. This means that you can borrow more money than you would be able to with a standard mortgage, giving you the extra funds you need to make your vision a reality.

What are the benefits of a renovation mortgage?

There are a number of benefits that come with taking out a renovation mortgage, including:

  • You can borrow more money: 

As we mentioned above, one of the biggest advantages of a renovation mortgage is that you can borrow more money than you would be able to with a standard mortgage. This is because the loan amount is based on the value of your property after the renovations have been completed rather than the current value.

This means that you can finance even the most ambitious projects without worrying about finding the extra funds yourself.

  • You don't have to take out multiple loans:

Another advantage of a renovation mortgage is that it allows you to finance your entire project with just one loan. This is in contrast to taking out a standard mortgage and then a separate loan for the renovations, which can be more expensive and complicated.

With a renovation mortgage, you can make all the necessary arrangements with just one lender, making the process much simpler and less stressful.

  • You may be able to get a better interest rate:

Another benefit of a renovation mortgage is that you may be able to get a better interest rate than you would with a standard mortgage. This is because lenders see renovation mortgages as being less risky than standard mortgages, as the value of your property is likely to increase after the renovations have been completed.

This means that you could end up saving money on your monthly repayments and the overall cost of your loan.

What are the disadvantages of a renovation mortgage?

There are also a few disadvantages that you should be aware of before taking out a renovation mortgage, including:

  • You could end up borrowing more money than you need:

One of the potential drawbacks of a renovation mortgage is that you could end up borrowing more money than you actually need. This is because the loan amount is based on the value of your property after the renovations have been completed rather than the current value.

This means that you could end up borrowing more money than you can afford to repay, which could put your home at risk.

  • You may have to pay for an appraisal:

Another potential disadvantage of a renovation mortgage is that you may have to pay for an appraisal. This is because the lender will need to know the value of your property after the renovations have been completed in order to calculate the loan amount.

If you're planning a large renovation project, this could end up being quite expensive.

  • You may have to wait longer for the money:

Another potential downside of a renovation mortgage is that you may have to wait longer for the money than you would with a standard mortgage. This is because the lender will need to appraise your property and assess your plans before they can release the funds.

This means that if you're planning a quick renovation project, a renovation mortgage may not be the best option.

How do I apply for a renovation mortgage?

renovation mortgage

If you're interested in applying for a renovation mortgage, the first step is to speak to Bolt Mortgages. We will be able to assess your situation and find a loan that's right for you.

Once we have found a loan that meets your needs, you'll need to fill out an application form and provide the lender with all the necessary documentation. This will include proof of income, identity, and proof of address.

Once your application has been approved, the lender will then send you the money, which you can use to finance your renovation project.

What are the eligibility requirements for a renovation mortgage?

There are a few different eligibility requirements that you'll need to meet to qualify for a renovation mortgage, including:

You must be a homeowner:

One of the main eligibility requirements for a renovation mortgage is that you must be a homeowner. This means that you must already own your property outright or have a mortgage.

You must be over 18 years old:

Another requirement for most renovation mortgages is that you must be over 18 years old. This is because most lenders will only offer loans to people of legal age.

You'll need to provide proof of income:

When you apply for a renovation mortgage, you'll also need to provide proof of income. This could be in payslips, tax returns or bank statements.

You'll need to have a good credit history:

In order to qualify for a renovation mortgage, you'll also need to have a good credit history. This means you should have a good record of making repayments on time and in full.

If you don't have a good credit history, you may still be able to qualify for a loan, but you may have to pay a higher interest rate.

You'll need to provide proof of identity:

When you apply for a renovation mortgage, you'll also need to provide proof of identity. This could be in the form of a passport or driving licence.

You'll need to provide proof of address:

When you apply for a renovation mortgage, you'll also need to provide proof of address. This could be in the form of a utility bill or bank statement.

Mortgage loan for light renovations

If you're planning on carrying out light renovations on your property, then you may be able to finance these through a mortgage loan. Here are some of the most common types of light renovation that this type of loan can cover:

  • Decorating:

This can include painting, wallpapering or tiling.

  • New kitchen:

If you're planning on fitting a new kitchen, then this can be included in a mortgage loan for light renovations.

  • New bathroom:

As with a new kitchen, if you're planning on having a new bathroom fitted, this can also be included in the loan.

  • New boiler:

A new boiler can improve both the energy efficiency and the value of your property, making it a worthwhile investment.

  • Rewiring:

If your property needs rewiring, this can also be included in a mortgage loan for light renovations.

  • Windows and doors:

Replacing old windows and doors can help to improve both the look and the energy efficiency of your property.

  • Fascias, soffits and guttering:

These are all important components of your property's exterior, and replacing them can help to improve its appearance.

  • External rendering:

This can help protect your property from the elements and improve its appearance.

If you're planning any of these works, then a mortgage loan could be a good option to help spread the cost. First, however, it's important to speak to a Bolt Mortgages consultant to ensure you're getting the best deal for your circumstances.

At Bolt Mortgages, we offer a range of mortgage loans that can be used for light renovations. We'll work with you to find the best loan for your needs and help you through the application process.

Mortgage loan for heavy renovations and conversions

Mortgage loan for heavy renovations and conversions

Are you planning to carry out heavy renovations or conversions on your property? If so, you may be wondering how to finance such a project.

There are a number of options available to you, but one option that may be particularly suitable is a mortgage loan for heavy renovations and conversions.

A mortgage loan for heavy renovations and conversions can provide you with the funds to carry out your project and can often be arranged at a competitive rate.

If you consider taking out a mortgage loan for heavy renovations or conversions, you should bear a few things in mind.

These things include:

Firstly, it is important to ensure that you have a clear plan for your renovation or conversion project. This will help to ensure that the project is completed on time and within budget.

Secondly, you will need to provide detailed information about the proposed work to your lender. This should include an estimate of the cost of the work and a timeline for completing the project.

Thirdly, it is important to be aware that the value of your property may increase as a result of the renovation or conversion work. This can be beneficial if you are looking to sell your property in the future, but it is worth bearing in mind that you may need to pay more interest on your mortgage loan.

If you plan to carry out heavy renovations or conversions on your property, then a mortgage loan for heavy renovations and conversions could be ideal. With a mortgage loan, you can get the funds you need to complete your project, and you may even find that the value of your property increases as a result.

Why would a renovation mortgage be declined?

If you're planning to renovate your home, you may be wondering why your mortgage application could be declined. There are a few reasons why this could happen, and usually, it's because the property or group of properties is deemed unmortgageable under certain circumstances. 

Here are some examples:
  • The property is in disrepair and would require too much work to bring it up to standard
  • The property is located in an area that is prone to natural disasters, such as flooding or earthquakes
  • The property has been vacant for a long period of time and has fallen into disrepair
  • The value of the property is significantly lower than the amount you owe on the mortgage

If any of these apply to your situation, your mortgage application will likely be declined. However, there may be other options available to you, such as a personal loan or home equity line of credit. Talk to us at Bolt Mortgages about all of your options so that we can find the best way to finance your renovation project.

How much are renovation mortgage rates?

renovation mortgage rates

One of the most important factors to consider is the mortgage rate when it comes to home renovations. After all, this will directly impact your monthly payments and the overall cost of your project.

There are a few things to keep in mind when it comes to renovation mortgage rates. First, these rates are usually higher than regular mortgage rates. This is because lenders see home renovations as a higher risk investment.

Second, your interest rate will also depend on the type of loan you get. For example, personal loans tend to have higher interest rates than home equity loans.

Finally, your credit score will also play a role in determining your interest rate. You'll likely qualify for a lower rate if you have good credit.

With all of that said, let's take a look at some average renovation mortgage rates so you can get an idea of what to expect.

The first thing to remember is that these rates are just averages. Your actual rate will depend on several factors, including the type of loan you choose, your credit score, and the length of your loan.

That being said, here are some average renovation mortgage rates:

  • For a 30-year fixed-rate loan, you can expect to pay around 4.5%.
  • For a 15-year fixed-rate loan, you can expect to pay around 3.75%.
  • For a 5/1 adjustable-rate mortgage, you can expect to pay around 3.5%.

Of course, these are just averages. Your actual rate will depend on the factors we mentioned earlier.

Refurbishment mortgage alternatives

If you're looking to finance a property refurbishment, there are a few different options available to you. Here we explore some of the most popular alternatives and provide a short description and example of each one.

Personal Loan

A personal loan is one option for financing a property refurbishment. Typically, this is a shorter-term loan (usually 1-5 years) with fixed monthly repayments. You may be able to borrow up to £25,000 with a personal loan, although this will depend on your individual circumstances.

Home Equity Loan

Another option for financing a property refurbishment is a home equity loan. This is where you borrow against the equity in your home – usually up to around 85% of the property value. Home equity loans typically have lower interest rates than personal loans, but they are secured against your home, so you could lose your home if you default on the loan.

Bridging Loan

A bridging loan is another option for financing a property refurbishment. This is a short-term loan (usually 6-12 months) used to 'bridge' the gap between buying a property and selling your current property. Bridging loans can be expensive, so it's important to make sure that you will be able to sell your current property within the loan timeframe.

Mortgage Refinance

Mortgage refinance is another option for financing a property refurbishment. This is where you take out a new mortgage on your property, using the equity in your home to finance the refurbishment. A mortgage can be a good option if you have a good credit history and can get a competitive interest rate.

Property Development Finance

Property development finance is another option for financing a property refurbishment. This is typically a short-term loan (usually 12-18 months) that is used to finance the purchase and refurbishment of a property. Property development finance can be expensive, so it's important to make sure that you can sell the property at completion.

Hard Money Loan

A hard money loan is another option for financing a property refurbishment. This is a short-term loan (usually 12-24 months) that is backed by collateral, such as the property you are refurbishing. Hard money loans can be expensive, so it's important to make sure that you can repay the loan within the timeframe.

Private Investor

A private investor is another option for financing a property refurbishment. This is where you raise finance from a private individual rather than a bank or financial institution. Private investors typically invest in properties that they believe have good growth potential.

Joint Venture Partner

A joint venture partner is another option for financing a property refurbishment. This is where you find an investor who is willing to finance the refurbishment in return for a percentage of the profits. Joint venture partners typically invest in properties that they believe have good growth potential.

Asset Finance

Asset finance is another option for financing a property refurbishment. This is where you use an asset, such as a property or a piece of equipment, as security for a loan. Asset finance can be expensive, so it's important to make sure that you can repay the loan within the timeframe.

Commercial Mortgage

A commercial mortgage is another option for financing a property refurbishment. This is a mortgage that is secured against commercial property, such as an office or retail unit. Commercial mortgages typically have higher interest rates than residential mortgages, so comparing rates before you apply is important.

If you plan to refurbish a property, there are many different financing options available to you. It's important to compare the different options and choose the one that best suits your circumstances.

What lenders offer renovation or refurbishment mortgages?

There are a number of different types of products available, each with its own advantages and disadvantages.

Variable Rate Mortgage

The most common type of product is the standard variable rate mortgage. This offers the borrower a low-interest rate for the loan's initial period, typically two to five years. After this period, the interest rate will revert to the lender's standard variable rate, which is usually higher than the introductory rate.

Fixed-Rate Mortgage

Another popular type of product is the fixed-rate mortgage. This offers borrowers the security of knowing exactly how much their repayments will be for a set period of time, typically two to five years. After this period, the interest rate will revert to the lender's standard variable rate.

Specialised Mortgages

There are also a number of specialist renovation or refurbishment mortgages available. These products tend to have higher interest rates than standard mortgage products but offer features such as extended repayment terms and the ability to make overpayments without penalty.

Which type of product is right for you will depend on your individual circumstances. At Bolt Mortgages, we will help you compare different products and find the one that best meets your needs.

Renovation mortgage advice from Bolt Mortgages

If you're considering undertaking a renovation project, it's important to seek expert mortgage advice. At Bolt Mortgages, we have a team of experienced advisers who can help you secure the right finance for your project.

We'll work with you to understand your goals and objectives and tailor a mortgage solution that meets your needs. We have a range of products available, including specialist renovation mortgages, so we're confident we can find the right option for you.

So if you're looking for expert mortgage advice on your renovation project, please don't hesitate to get in touch with us today.

Remortgage for home improvements guide

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One of the main reasons people remortgage is to get a better deal on their mortgage repayments. You could save money by remortgaging to a new deal if interest rates have fallen since you took out your mortgage. Alternatively, if your financial circumstances have changed, you might be able to switch to a more suitable mortgage deal.

Remortgaging can also be a good way to raise money for home improvements. For example, suppose you have equity in your property. In that case, you could potentially borrow a large sum of money for improvements, such as a new kitchen or bathroom, an extension, or loft conversion.

If you're thinking of remortgaging to fund home improvements, you can bear a few things in mind. 

Here are our top tips:

  1. Make sure you shop around for the best deal:

There are a lot of different mortgage deals on the market, so it's important to compare different offers to make sure you get the best deal for your circumstances.

  1. Consider the fees:

When you remortgage, you'll usually have to pay arrangement fees, which can be expensive. So make sure you factor these in when you're comparing mortgage deals.

  1. Think about how much you want to borrow:

It's important only to borrow as much as you need, as this will help keep your repayments down. Make sure you've got a realistic idea of how much your home improvements will cost before you apply for a mortgage.

  1. Get professional advice: 

If you're unsure about anything, it's always a good idea to speak to a qualified mortgage advisor from Bolt Mortgages who can help you find the right deal for your needs.

Factors to be considered before a home improvement remortgage will be agreed.

Here are some of the key factors that lenders will consider before agreeing to a home improvement remortgage:

Affordability:

Can you afford the monthly repayments on the larger mortgage? Lenders will assess your income and outgoings to make sure you can comfortably afford the loan.

Cost of the Home Improvement:

How much will the home improvement cost? First, you'll need to have a realistic estimate of the costs involved to borrow the appropriate amount.

Credit History:

Do you have a good credit history? Lenders will want to see that you have a good track record of repaying loans on time.

Equity:

How much equity do you have in your home? Lenders will want to see that you have a decent amount of equity built up before they'll agree to lend you more money.

Financial Circumstances:

What is your current financial situation? Lenders will take into account things like your employment status, income and outgoings when assessing your application.

Type of Property:

What type of property do you live in? Some lenders may be reluctant to lend on properties that are considered a higher risk, such as flats or maisonettes.

By taking all of these factors into account, you can give yourself the best chance of being approved for a home improvement remortgage.

Here are three things you could look to remortgage for:

  1. An extension:

If you're looking to add some extra space to your home, an extension is a great option. Depending on what suits your needs and property best, you can either extend outwards or upwards.

  1. A loft conversion:

A loft conversion can give you an extra room without taking up any extra space on your property. This is a great option if you're looking to add an extra bedroom or bathroom.

  1. Property renovation:

If your property is in need of some TLC, remortgaging could give you the funds you need to carry out some much-needed renovations. This could include anything from a new kitchen or bathroom to redecorating throughout.

If you're considering remortgaging to fund some home improvements, make sure to speak to one of our highly experienced mortgage advisors at Bolt Mortgages to see if it's the right option for you.

Should I remortgage before I make the improvements?

Making home improvements can be a great way to add value to your property and make it more comfortable to live in. However, if you're thinking about remortgaging your home to finance the improvements, there are a few things you need to consider first.

If you're looking to remortgage to release equity from your home, the amount you'll be able to borrow will be based on the current value of your property. If you wait until after you've made the improvements to remortgage, the new value of your property will be taken into account, and you may be able to borrow more money.

However, it's worth bearing in mind that any improvements you make may not add as much value to your home as you think. Therefore, it's important to do your research and speak to a few different estate agents to estimate how much value your proposed improvements are likely to add.

Another consideration is the length of time it will take to complete the improvements. If you're planning on doing a lot of work, it may be worth waiting until it's all finished before remortgaging, as you may not be able to keep up with your mortgage repayments if you release equity from your home before the work is completed.

Finally, it's also worth shopping around for the best mortgage deal before making any decisions. There is a wide range of deals on the market, and it's important to find one that suits your individual circumstances.

Alternative financing options to remortgaging for home improvements

There are a number of alternative financing options to remortgaging for home improvements. These include personal secured loans, credit cards, and home equity loans.

Personal Secured Loans

Personal secured loans are one option for financing home improvements. These loans are typically used for larger purchases, such as home renovations or repairs. The interest rate on a personal secured loan is generally lower than that of a credit card or home equity loan. However, the loan amount must be repaid over a fixed period of time, and the borrower may be required to provide collateral, such as a vehicle or piece of property.

Credit Cards

Credit cards can also be used to finance home improvements. Although the interest rates on credit cards are typically higher than those of personal secured loans, there is no need to repay the loan over a fixed period of time.

Home Equity Loans

Home equity loans are another option for financing home improvements. These loans are based on the value of the borrower's home and can be used for any purpose. The interest rate on a home equity loan is typically lower than that of a credit card or personal secured loan. However, the borrower may be required to pay closing costs, and the loan amount must be repaid over a fixed period of time.

When choosing an alternative financing option for home improvements, it is important to compare each option's interest rates, fees, and terms. It is also important to consider the borrower's ability to repay the loan over time.

Home improvement remortgage advice from Bolt Mortgages

If you're considering undertaking some home improvements and considering a remortgage to finance the work, then Bolt Mortgages can help. We're experts in mortgage advice in Essex, so we can offer you tailored guidance on which remortgage product would best suit your needs.

Remortgaging can be a great way to unlock equity in your home and use it to fund home improvements. And with interest rates currently at historic lows, there has never been a better time to remortgage.

At Bolt Mortgages, we'll do all the hard work for you. First, we'll compare the whole market to find the most competitive deal and then guide you through the application process. We can even recommend reputable local builders and tradespeople to carry out the work.

So if you're thinking of undertaking some home improvements and would like to explore your remortgage options, please don't hesitate to get in touch. We offer free initial advice calls, so why not give us a call today and see how we can help you?

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