What are the options for financing home renovations?
Unless you have savings, you’ll need to think about how to finance a renovation project. Here we look at some of the key options available to you.
- Renovation Mortgages
A renovation mortgage gives you the money to buy a property that needs work and to cover the future renovation costs. Instead of being based on the current condition of the property, the loan value is based on what it will be worth once the renovations are complete. Not all lenders offer these types of mortgage and the lender will assess the property you are buying to ensure it meets their criteria. For example, they generally won’t lend on derelict properties.
- Remortgage for renovations
If you’re not locked into a fixed term deal, or you’re coming to the end of your fixed term, this is a popular option. 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.
- Further advance from your existing lender
If you already have a reasonable interest rate or want to stay with your current mortgage provider, you can apply to them to borrow more money. This is called a Further Advance. 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.
- 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’re increasing your financial commitments, the first thing to do is to speak to a mortgage broker like Your Mortgage Expert. It’s always important to assess whether you can afford it and your broker will take the time to go through all these options for you.
It’s 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.
We regularly help homeowners in Salisbury, Wiltshire and the surrounding areas fund renovations – from period property upgrades to modern extensions.
Why choose Your Mortgage Expert
At Your Mortgage Expert, we’re experts in helping people to fund renovations and extensions. We’ll 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 and national 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.
A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
Pros and Cons for home renovation finance options
Below is a comparison of the main ways to finance a home renovation in the UK:
| Option | Best For | Advantages | Things to Consider |
|---|---|---|---|
| Remortgage for home improvements
| Homeowners nearing the end of a fixed deal
| Often lower interest rates; can release equity
| Early repayment charges (ERCs) may apply
|
| Further advance
| Staying with your current lender
| Simple process; avoids a full remortgage
| New borrowing may be at a different rate
|
| Renovation mortgage
| Major structural works
| Based on projected end value
| More complex underwriting
|
| Personal loan / credit | Smaller projects under £25,000 | Quick access to funds | Higher interest rates |
The right option depends on your current mortgage deal, how much equity you have in your property, and the scale of your renovation project. Speaking to a mortgage adviser before committing to borrowing can help you avoid costly mistakes.
How to Decide the Best Way to Finance Your Renovation
When choosing how to finance a home renovation, consider:
Whether you are near the end of your fixed mortgage deal
How much equity you have in your property
The total cost of your renovation
Whether the property will increase in value
Whether early repayment charges apply
Speaking to a mortgage adviser before committing to borrowing can help you compare long-term costs and avoid unexpected fees.
Home Renovation Finance FAQs – Mortgages, Remortgaging & Further Advances Explained
Planning a renovation can raise lots of financial questions. From whether you can add renovation costs to your mortgage, to understanding how much you can borrow, it’s important to choose the right funding option for your circumstances. Below we answer some of the most common questions about financing a home renovation in the UK.
Every renovation project is different. The right option will depend on your current mortgage deal, how much equity you have in your property, and the scale of work you’re planning. Speaking to an experienced mortgage adviser before committing to borrowing can help you understand your options clearly and avoid costly mistakes.
If you’re considering a renovation and would like personalised advice, our team at Your Mortgage Expert would be happy to help.
Frequently Asked Questions
Can I add renovation costs to my mortgage?
Is it better to remortgage or take a loan for home improvements?
How much can I borrow for a home renovation?
What is a renovation mortgage?
Can I get a mortgage on a property that needs major refurbishment?
Can I get a further advance for home improvements?
Do I need planning permission before applying for renovation finance?
Will renovating my home increase its value?
Can I remortgage to pay for an extension?
A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.