Mortgage Update for April
Adam Nanson from Your Mortgage Expert provides the Mortgage Update for April. he talks further about how to finance your renovation project:
“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.
“If you don’t have savings, there are various options available to you for funding your renovation. We will let you know whether adding the cost of home improvements to your mortgage will be cheaper for you than other forms of finance. For example, paying for the project with a personal loan or credit card.
“If you choose to remortgage your home, we have 5 top tips for taking out a remortgage to fund your renovation:
- 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 for the full amount you need.
- 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 pay. In this circumstance, other options might cost you less, such as additional borrowing from your current mortgage lender or a secured loan (also known as a second charge) from a different lender.
- 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. Materials like glazing have spiralled in price as have other building supplies. 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 or architect before commencing work about what sort of things add value in your area.
To find out more, you can read our guide to remortgaging to renovate your home. Or if you have any further questions about the mortgage update for April, get in touch.
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