If you are planning home improvements, one of the most common ways to fund the cost is through a remortgage. Many homeowners look at remortgaging as a way to release equity from their property and borrow money at lower interest rates compared to unsecured loans or a personal loan.
Whether you are planning a house extension, loft conversion, or upgrading your living space with solar panels, a remortgage for home improvements can help you spread the cost through manageable monthly repayments.
The Quick Answer
A remortgage for home improvements allows you to switch your current mortgage deal or borrow additional money against your home to fund renovation plans.
You can either move to a new lender or stay with your current lender and take additional borrowing. The amount you can borrow depends on your loan-to-value, outstanding mortgage balance, and overall financial situation.
Remortgaging means your borrowing is secured against your home, so it is important to make sure you can comfortably afford the new monthly payments over your mortgage term.
What is a remortgage for home improvements?
Remortgaging means replacing your current mortgage with a new mortgage deal, either with your current lender or a new lender.
Many homeowners choose to remortgage for home improvements to:
- Release equity from the value of your home
- Borrow money at lower mortgage rates
- Combine borrowing into a single monthly payment
This type of mortgage borrowing is secured lending, which usually offers lower interest rates than unsecured loans or a home improvement loan.
How remortgaging for home improvements works
When you remortgage for home improvements, the lender will assess:
- Your current mortgage and outstanding mortgage balance
- The value of your property and available equity
- Your loan-to-value ratio after borrowing more
- Your income and ability to meet monthly repayments
If your property has increased in value or house prices have risen, you may be able to release more equity to fund home renovations.
Ways to fund home improvements through your mortgage
Remortgaging to a new deal
You can switch to a new mortgage deal and borrow additional money at the same time. This is often done when your current deal is ending or when better mortgage rates are available.
This option can help save money if you secure lower interest rates.
Additional borrowing with your current lender
Some lenders allow additional borrowing without changing your main mortgage deal.
This means:
- You keep your current mortgage
- Take a separate loan secured against your home
- Sometimes have separate loans with different rates
Further advance or product transfer
If you stay with your current lender, you may be offered a new deal or a further advance. This can be quicker than switching lenders and may take several weeks instead of starting a full new mortgage agreement.
Remortgage vs personal loan for home improvements
You may also consider a personal loan or an unsecured loan.
Remortgage
- Lower interest rates
- Spread over a longer mortgage term
- Secured against your home
- Higher borrowing potential
Personal loan or unsecured loans
- Faster to arrange
- Short-term borrowing
- Higher monthly payments
- Not secured against your property
For larger renovation plans such as a whole house upgrade or house extension, remortgaging is often more cost-effective.
What affects how much you can borrow?
Several factors influence how much you can borrow when remortgaging options are considered:
- Loan-to-value ratio
- Value of your home
- Outstanding mortgage balance
- Current mortgage deal and interest rate
- Your financial situation and income
- Ability to comfortably afford repayments
Lenders will also look at your mortgage term and whether the new monthly payments fit within your budget.
Costs to consider when remortgaging
Before you remortgage for home improvements, it is important to understand the overall cost.
Early repayment charge
If you leave your current deal early, you may need to pay an early repayment charge. This can reduce the savings from switching.
Fees and charges
You may need to pay:
- Arrangement fees
- Legal fees
- Valuation fees
These should be factored into the total cost of your new deal.
Interest over time
While lower rates can reduce monthly payments, extending your mortgage term can increase the total interest you pay over time.
When does remortgaging make sense?
Remortgaging for home improvements is often suitable when:
- You want to fund home renovations, such as a loft conversion or solar panels
- Your current mortgage deal is ending
- You can access lower interest rates
- You have built enough equity in your property
- You want a single monthly payment instead of separate loans
When to be cautious
Remortgaging may not always be the best option if:
- You are still tied into your current deal with high early repayment charges
- Your financial situation has changed
- You only need a small amount of short-term borrowing
- The new mortgage deal increases your overall cost significantly
How The Mortgage Pod helps with remortgaging for home improvements
At The Mortgage Pod, we help many homeowners explore remortgaging options to fund home improvements in a way that fits their financial situation.
We help by:
- Assessing your current mortgage and outstanding balance
- Comparing mortgage deals across lenders
- Identifying whether to stay with your current lender or switch to a new lender
- Structuring borrowing to keep monthly payments affordable
- Helping you release equity while managing overall cost
Our aim is to make sure your remortgage for home improvements is set up in a way that adds value to your home without creating unnecessary financial pressure.
Frequently Asked Questions
Can I remortgage for home improvements?
Yes. Many homeowners remortgage to release equity and fund home improvements such as a house extension, loft conversion, or general home renovations.
How much can I borrow for home improvements?
This depends on your loan-to-value, equity, and financial situation. Lenders will assess how much you can comfortably afford based on your income and monthly repayments.
What is the maximum I can borrow with a remortgage for home improvements?
The maximum you can borrow depends on your loan-to-value, which is based on the value of your home compared to your outstanding mortgage balance. Most lenders will allow borrowing up to around 85% to 90% of your property’s value, although a small number of lenders may offer up to 95% loan to value in certain circumstances. The exact amount will depend on your financial situation, income, and ability to afford the new monthly repayments, as well as the lender’s criteria.
Is it better to remortgage or take a personal loan?
Remortgaging usually offers lower interest rates and higher borrowing amounts, while a personal loan may suit smaller or short-term borrowing needs.
Will remortgaging increase my monthly payments?
It can. Your monthly payments depend on your new mortgage deal, interest rate, and mortgage term. Lower rates may reduce payments, but borrowing more can increase them.
Can I stay with my current lender?
Yes. Many lenders offer additional borrowing or a new deal without switching, although comparing with a new lender may help you find better mortgage rates.
How long does remortgaging take?
Remortgaging usually takes several weeks, depending on the lender, legal process, and how quickly documents are provided.
