Remortgaging for Home Improvements

Maximise the amount you can borrow for home improvements with expert help from a specialist remortgage broker

Firstly, what home improvements are you looking to make?

Home Remortgages Remortgaging For Home Improvements
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Jon Nixon

Reviewer: Jon Nixon

Director of Distribution

Updated: May 1, 2024

How we reviewed this article:

Our experts continuously monitor changes in the financial space and work closely with qualified mortgage advisors for factual verification.

May 1, 2024

By remortgaging your home, you can release available equity to help fund home improvements, but many homeowners don’t know where to start. We’ll explain exactly how to do this, what alternatives to consider, and where to get expert advice.

Can you remortgage to fund home improvements?

Yes, absolutely. As long as you have enough equity in your home and can afford the repayments, it is possible to remortgage to foot the bill for home improvements and extensions.

How does remortgaging to borrow more work?

First, decide what type of home improvements you want to make, if you haven’t already. This could be:

  • Fitting a new bathroom or kitchen (typically the two most expensive projects in a property)
  • Building an extension
  • Decorating a number of rooms at the same time
  • Garden renovations / new garage or outbuildings

Once you know exactly what you want to achieve and how much it will cost, you can do some quick sums to work out whether remortgaging to release equity is the right fit for you. The information you’ll need is:

  • The outstanding mortgage balance
  • Approximate valuation of the property
  • Cost of renovations

As an example, if you have an outstanding mortgage of £50,000 and your house is worth approximately £150,000 this leaves £100,000 equity in your property. If your renovations are going to cost £25,000 then you will still have a relatively low loan-to-value of 50% (difference between your total mortgage borrowing after remortgaging – £50,000 + £25,000 – and current property value).

The next step is to find the right lenders who can cater for this type of remortgaging requirement.

Maximise your chance of approval with a broker who's a specialist in remortgages

Get Started Phone Icon 0808 189 2301

How to remortgage to fund home improvements

Your first step should be to speak to a broker who specialises in helping homeowners release equity via a remortgage. They will have the knowledge, experience and lender contacts to ensure you get the best deal.

Make an enquiry and we will match you with a remortgage specialist who can guide you through the following steps to completion.

  • Calculating your loan-to-value (LTV) and the amount of equity you need
  • Check whether planning permission is required for the work you’re thinking of carrying out
  • Finding the ideal mortgage lender with the best rates to fund your home improvements
  • Optimising your credit reports and helping you with all the necessary paperwork for your application

Calculating the amount of equity you can release

Some mortgage providers impose a cap on the amount of equity you can release for home improvements, but it is possible to release up to 90% and over with the right lender.

Try our home improvements calculator below to get an idea of the maximum amount of capital you can release from your property as well as what your mortgage payments will be afterwards.

Home Improvements Calculator

Calculate your new Loan to Value (LTV) if you're planning to release equity from your mortgage


Estimate if exact value is unknown
£
Estimate if exact value is unknown
£
Amount must be less than property value
This is the capital you’ve built up by paying your mortgage
£
What will the new term length be after you've refinanced?
years
Enter the mortgage rate, 5.5% is a typical rate currently but this can vary
%

New LTV:

After you have remortgaged your new LTV ratio will be and your new mortgage payments will be as indicated below…

New Monthly Repayments:

Get started with an expert broker to find out how much they can help you save on your remortgage.

Extending your property

Extending your property is often a cost-effective alternative to moving house, and it can significantly increase the value of your home. It’s possible to fund one, or partially fund one, with any equity you can release when you refinance, but there are steps you should take first.

Here are some key things to consider before arranging your remortgage…

Regulatory approval

Planning permission isn’t usually needed as most extensions are classed as permitted developments (unless it’s a 2-story extension), but it’s important to check that your plans meet these conditions. Most extensions do, however, need building regulations approval. You can find out more about obtaining these permissions on the government’s website. You should also consider checking with your local council.

Should you remortgage before or after the work?

Remortgaging to pay for home improvements is something that people usually do in advance of carrying out the work. But if you have the cash to pay for it in the short term, you might choose to remortgage after the improvements have been completed. Home improvements can increase the value of the property, which might mean you have access to more equity for a remortgage, and therefore a wider range of products and better rates.

Other types of home improvement

Extensions are not the only type of home upgrade you can carry out with the equity you release when you refinance your property. Other forms of home improvement you could do include…

Home renovations

If your house needs significant repairs, it is possible to raise funds with a remortgage to renovate the property.

Property renovations are broadly split into two categories:

  • The property is habitable but needs some modernisation
  • The property is considered uninhabitable by a mortgage lender

The minimum requirement for a property to be considered habitable by a remortgage lender is generally a usable kitchen and bathroom and a watertight roof.

Mortgage retention

One possibility to be aware of is that the valuation may identify a serious problem, for example, electrics that don’t comply with current regulations. In this case, the lender may impose retention, which means they will deduct the amount needed for repairs from the initial advance. Once you can prove that you’ve fixed the problem, the lender will advance the rest.

Sometimes, the renovation of a property can take a number of months or even years. If you come to the end of a mortgage deal during this time, it is possible to remortgage during a renovation and again, your options will depend on whether or not the property is habitable.

If your improvements are successful in increasing the value of your property, you may choose to remortgage after the renovation as, if the loan is a smaller proportion of the property value, there could be a wider choice of remortgage deals to choose from, and better rates too.

Loft conversions

A loft conversion is one of the most popular ways to add extra space to a home. A basic conversion can start at £15,000, but the average dormer loft conversion with a double bedroom and en-suite costs between £35,000 and £45,000. How much you spend is, of course, your decision, but it’s wise to think carefully about what will add value within a reasonable budget.

Many people choose to remortgage before starting a loft extension as this can provide the funds they need to complete the work, often at a lower interest rate than other types of borrowing.

Research has found that a loft conversion could add up to 20% to the value of a home, so don’t just think about a remortgage to pay for a loft conversion, but also a remortgage after a loft conversion. If your house has increased in price by 20%, your mortgage will be a smaller proportion of its value, and this could open up a range of lower remortgage rates.

We're so confident in our service, we guarantee it.

We know it's important for you to have complete confidence in our service, and trust that you're getting the best chance of mortgage approval at the best available rate. We guarantee to get your mortgage approved where others can't - or we'll give you £100*

Happy approved couple

Is remortgaging the right thing to do?

If you have enough equity in your property and are eligible for a remortgage this may be the right route for you to take. However, there are other considerations which may not make it an attractive choice, such as:

  • While you can remortgage whenever you want, you might incur early repayment charges if your current deal has not yet reached its completion
  • You may have a high LTV
  • Are the new repayments affordable currently?
  • What if more money is required to complete the project?

With this in mind, it’s important to consider all the options before reaching a final decision.

If you have enough equity in your property, are eligible for a remortgage and won’t be stung by heavy early repayment charges, refinancing might be a good choice for you, but it isn’t the only way to raise money for home improvements and it’s important to consider all options.

If you’re unable to remortgage or would prefer not to, for whatever reason, here are some potential alternatives that you could speak to your broker about…

Alternatives to Remortgaging

If you’re unable to remortgage or would prefer not to, for whatever reason, here are some potential alternatives that you could speak to your broker about…

  • Secured loans: This is a secondary mortgage that sits behind your primary one as a second-charge debt. It’s often possible to borrow a much larger amount than you’d be able to on a remortgage, provided the lender is convinced you can service both debts.
  • Bridging loans: This might be an option if you can’t remortgage in the short term but may be able to in several months’ time. A bridging loan might also be a fallback if you’re planning to renovate your home to sell it, or if time is of the essence – they can be arranged quicker than remortgages.
  • Equity release: If you’re over 55, this could be an alternative way to access the equity in your property and release it tax-free for those home improvements.
  • Personal loans: If you don’t want to remortgage or are unable to, personal loans could be an alternative if you need between £25,000 and £50,000 for your refurbishment and can afford to take on the debt.

We're so confident in our service, we guarantee it.

We know it's important for you to have complete confidence in our service, and trust that you're getting the best chance of mortgage approval at the best available rate. We guarantee to get your mortgage approved where others can't - or we'll give you £100*

Happy approved couple

Factors that could impact your plans

Whether you are remortgaging to fund an extension, loft conversion, or other home improvements, here are some of the things you need to think about.

How much equity you have

One of the first things to think about if you want to remortgage to fund building work is the level of equity you have in your home. This will serve as your deposit and you can easily calculate this by subtracting the value of your mortgage balance from the value of your property.

The more equity you have, the better, as this will increase the number of approachable lenders.

For home improvement remortgages, some lenders impose a loan-to-value cap. There are a number who set the limit at 75%, a few 80-85% and others who offer 90% and up.

The property type

Most lenders will lend on properties built with standard construction methods, but options might be more limited for studio apartments, ex-council properties, flats in high-rise blocks or properties that are built from ‘non-standard’ materials, such as concrete or timber.

It’s possible to secure a mortgage on all kinds of unusual and non-standard construction properties, but you’ll almost certainly need a broker who can match you with a specialist lender.

Moreover, if you’re remortgaging to renovate an unusual property, such as a barn conversion, it’s important that you have the correct planning permission and other amenities. 

Read our article on non-standard construction property mortgages for more information.

Bad credit

There are lots of remortgage options for people who want to unlock equity for home improvements but have experienced credit problems. It is now possible to borrow up to 90% loan to value, or even more, with some bad credit mortgage lenders.

Your choice of remortgage rates and deals will likely depend on the type of issues on your record and how long ago they happened, as well as the reason for your bad credit.

See our complete guide to bad credit remortgages for more information.

Age

The minimum age for most lenders is 18 and there is an increasing number of options for older borrowers. For example, some high street lenders have had a maximum age at application or at the end of the mortgage term, but there are now lenders that do not stipulate a maximum age.

For these lenders, the important thing to think about is affordability and they will want to know that, if the remortgage means your mortgage term stretches into your retirement, you will continue to be able to afford the repayments based on your retirement income.

Early repayment charges

It is possible to remortgage to fund home improvements if you have early repayment charges on your current mortgage, but it may be expensive. You need to decide whether it’s worth paying the charges or waiting until they no longer apply. A mortgage broker can help you work out the overall cost of both options and help you make the right decision.

Remortgaging after renovating a property

There are several considerations to bear in mind if you are remortgaging a home after you have carried out renovation work on it. Firstly, the value of the property will likely have increased depending on what improvements were made, so you could potentially borrow more, if you need to.

Other things to think about include:

  • Are you able to remortgage again so soon if you refinanced to fund the home improvements?
  • What kind of deal will you qualify for based on the changes to your LTV?

A broker who specialises in remortgages will be best placed to help you answer these questions and find the right solution.

Get matched with a remortgage specialist

If you’re remortgaging to fund home improvements, professional advice is essential. Releasing equity from a property should never be done lightly and there is a lot to think about when upgrading your home, but the experts we work with are on hand to help you out.

There are specialised remortgage brokers in our network who help people release equity to pay for home improvements every day. They have the knowledge, experience and lender contacts to make sure you get the best deal, and will guide you through the process from start to finish.

Call 0808 189 2301 or make an enquiry and we’ll match you with the remortgage expert who’s best placed to help you refinance for home improvements. We won’t charge a fee for the introduction and your first consultation will be free with no obligation to proceed.

FAQs

Yes. It’s possible to remortgage a buy-to-let property to raise money for renovations, and the calculation for how much you are able to borrow will be based on a combination of the rental income the property can achieve and your circumstances.

Although affordability models can differ, for many lenders if you pay tax at the basic (20%) rate, the rental income has to cover at least 125% of the mortgage, assuming the mortgage is charged at 5.5%. For higher rate taxpayers, this increases to 145% or 160%.

Potentially. If you have enough equity in your home you may be able to remortgage to build a new house. If you cannot raise enough money on your existing property to pay to build a new house outright, you could use it as a deposit and get a loan to help you with the build costs.

The type of loan you need will depend on whether you are building a single property or starting a more commercial development and these types of projects would generally need a deposit of about 15% or 20%.

If you’re unable to raise enough to fund the construction through a remortgage on your existing property, you may need to take out a self-build mortgage to borrow the money for the project.

Yes, this is possible. What you’d actually need is what’s called an unencumbered mortgage, which is basically a home loan for someone who already owns a property outright but now needs to release some equity. One of the most popular reasons for doing this would be for renovations or home improvements.

If you make an enquiry with us we can arrange for a mortgage broker who has experience arranging this type of borrowing to contact you straight away.

Ask a quick question

We can help!
We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in Remortgaging for Home Improvements.
Ask us a question and we'll get the best expert to help.

Our Brokers

Get in touch today

Make an enquiry and we'll arrange for an experienced mortgage broker we work with to contact you straight away.

1 of 3
£
£
£
2 of 3
3 of 3 Send!

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

Maximise your chances of approval, whatever your situation - Find your perfect remortgage broker

By browsing our site you consent to our use of cookies.