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Guide to Remortgaging to Renovate

Since the lockdowns of March 2020, we have all spent a great deal more time in our houses. And, with spiralling house prices, many homeowners are choosing to extend and renovate their existing properties rather than moving.

With the cost of moving house increasing all the time, you might be considering staying put and extending your home to getting that extra living space you need. And, potentially adding value to your property at the same time.

In this guide to remortgage to renovate we will talk about the pros and cons of remortgage to renovate. And the other financial options available to fund your project.  We will also give you some information regarding planning permission, costings, and tips for remortgaging.

If you have any questions after reading this Guide to Remortgage to Renovate, we would be happy to help.

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Financing your renovation

Home improvements such as extensions can be a good way to get the larger house you want without moving home. By adding an extra room or rooms to your house, you can climb the property ladder without all the hassle and expense of moving house.

If you are thinking about significant home improvements you’ll need to think about how to finance these. The first thing to do is to speak to a mortgage broker like Your Mortgage Expert.

If you are increasing your financial commitments, it is always important to assess first whether you can afford it. And your broker will take the time to go through all these options for you.

Here, we go through some of the financial options available to you:

  • Remortgaging to renovate

If you are not locked into a fixed term deal, or you are coming to the end of your fixed term, this is a popular option.

For example, if your current mortgage is £150,000. And you’ve costed that your extension will cost you £30,000. You could apply for additional borrowing, and take out a new mortgage for £180,000. You can then use £30,000 on the extension.

As mortgage rates remain relatively low, Adding the cost of home improvements to your mortgage can be cheaper than other forms of finance such as taking out a personal loan or using a credit card.

It is worth remembering that borrowing additional money on a new mortgage deal is a long-term commitment. And you’ll repay this money back over the full term of the mortgage – including interest.

We can advise you whether lenders are likely to lend you more money and whether you will get a better rate if you stay with your current mortgage company or switch to a new lender.

Your broker will also talk about whether there will be any early repayment charges to your existing lender should you remortgage. And, whether there are any costs or fees associated with remortgaging.

  • Further advance from your current mortgage lender

If you already have reasonable interest rates or want to stay with your current mortgage provider, you can apply to them to borrow more money. Your Mortgage Broker can also help arrange this type of mortgage borrowing. How much additional money you can borrow will depend on how much of your mortgage you’ve paid off, or whether your home has risen in value.

It’s important to note that the interest rate could be different on the additional amount borrowed, and as with remortgaging, it will be secured against your home.

  • Bank loans and credit cards

Credit cards and personal loans generally have a higher interest rate than a mortgage loan. They might be a suitable option if you only want to borrow over a shorter period and you think you’ll be able to pay them off quickly. Only take out a loan or credit card debt if you are confident then you’ll be able to afford the monthly repayments comfortably.

If you have any questions after reading this Guide to Remortgage to Renovate, we would be happy to help.

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How much does a house extension cost?

Obviously the cost of an extension will vary depending on what you want and also where you live.

Once you know what sort of extension you’d like, the best thing to do is get a few builders to come round and give you an accurate quote for the cost. Or to speak to an architect who will also be able to give you a good guide.

Some areas you might like to consider:

  1. Materials and Labour

Quotes for how much an extension costs are generally worked out per square meter. For instance, a single-storey extension would typically cost around £1,000 per square metre. So if you were having a 3x5m extension, it might cost around £15,000 for a single-storey, or up to £50,000 for a two-storey.

  1. Architects

It is a good idea with extensions to have an architect to supply you with drawings. As with most home renovation projects, the exact cost will depend on what you want. According to Check a Trade you can expect to pay between 5 and 12% of the total construction fees to an architect.

  1. Planning

In the next section we discuss planning permission. If your project requires planning permission, it will cost you to apply for it. Some of these fees may be included in your architect’s bill.

  1. Building regulation certificates

Building regulations is a requirement for any type of extension as it confirms that the work carried out is structurally sound. It covers things like drainage, electrics, external and internal walls, roofs etc. When it comes to selling your property, you will need to have the correct certificates.

  1. Don’t forget VAT

It is a good idea to ask for all your quotes to be supplied inclusive of VAT. If this is not possible, ensure you budget for an additional 20%.

  1. Contingency Fund

It is a good idea to have at least 10% Contingency Fund worked into your budget. Just in case anything goes wrong. And, just in case expenses for items increase over the course of your project.

If you have any questions after reading this Guide to Remortgage to Renovate, we would be happy to help.

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Planning permission for extensions

If you are building an extension, you need to consider is whether you need to request planning permission. Planning permission can not only add time to your build but also expense. Your builder and architect will be able to advise you on whether your extension requires planning permission.

The general rule of thumb is the larger and more significant improvements are likely to need planning permission from your local government. And the smaller, less obtrusive improvements are likely to not need permission – this is known as permitted development. Whether you need planning permission or not depends on a number of factors. As long as plans for your extension adhere to the following rules, you won’t have to get planning permission for the work:

  1. The extension isn’t higher than the highest part of the roof of the house.
  2. If a single-storey rear extension, it should not extend more than three metres beyond the original wall of the house, if a semi or terraced house, or four metres if a detached house.
  3. A two-storey or more extension should not extend more than three metres beyond the original wall of the house.
  4. The maximum height of a single-storey rear extension is four metres.
  5. A single-storey side extension should have a maximum height of four metres, and the width should be no more than half that of the original house.
  6. A two-storey extension has to be at least seven metres to the rear boundary.
  7. Materials used need to be similar or match the appearance of the house.
  8. No balconies or raised platforms

You may also need to have a Party Wall Agreement drawn up between yourselves and any neighbours whom the building work might affect.

Please note – if you’re planning to extend a new build house then you might need permission from the developer who may charge you a fee.

If you have any questions after reading this Guide to Remortgage to Renovate, we would be happy to help.

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Tips for remortgaging to renovate

Having read this guide to remortgaging to renovate, you might have decided that a remortgage is the option for you. If so, here are our 5 top tips:

  • Check how much equity you have in your house

If you need to borrow a certain amount for your project, you need to have enough equity in your house. If your property’s value has increased since you bought it, and you are in the same financial circumstances, you can usually remortgage for a higher loan value. If your home hasn’t increased significantly, however, remortgaging may not be possible.

  • Do you have any early repayment charges

Aim to remortgage at the end of your fixed term period. As switching deals mid-term can be very expensive. Speak to your broker if you want to remortgage mid term as they will check how much early repayment charge you will need to may. In this circumstance, other options might cost you less, such as a further advance.

  • Speak to your broker about any costs of remortgaging

Make sure you look carefully at any fees involved with taking out your mortgage. There may be things like an arrangement fee, a valuation fee or a booking fee. Speak to your mortgage broker about these fees and ensure you include them in the total cost of your project.

  • Check out Green Additional borrowing

Some lenders now offer products called “Green Additional borrowing”. If you’re looking to make energy efficient improvements to your home, it’s worth investigating whether you can obtain a cheaper mortgage rate. Lenders like Barclays, Nationwide and Natwest all have lower rates available for people looking to make energy efficient improvements.

  • Ensure your renovations increase the value of your home

As costs rise, so do the costs of extensions. Things like glazing have spiralled in price as have other building materials. Things like extra bedrooms and bathrooms often add value whereas larger reception rooms or garden improvements may not add as much. Speak to an estate agent before commencing work about what sort of things add value in your area.

If you have any questions after reading this Guide to Remortgage to Renovate, we would be happy to help.

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Why choose Your Mortgage Expert

At Your Mortgage Expert, we are experts in helping people to fund renovations and extensions. We will take the time to talk through your financial circumstances and advise on the option for you.

We are a family run mortgage broker based in Salisbury. But we can help you no matter where you live in the UK. Our highly experienced team understands the often complex process for getting a remortgage to renovate. We can help explain the whole process for you and will be by your side every step along the way.

On top of this, we can also put you in touch with our local business partners to help you with your project. We can recommend architects, solicitors, builders and more.

To find out more, why not get in touch and start discussing how you can finance the renovation of your dreams.

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