Getting your funds sorted for your home extension or renovation for 2022….

We, at Mint are aware that there are various approaches available for homeowners when it comes to paying for a new home extension or renovation. We, as a business always, of course, work with our customers, in respect of financing a planned extension or renovation. We always discuss key aspects of financing if required to do so. 

For your information, if you have an extension or renovation project in mind for the year ahead, in order to avoid the recently highlighted, difficult looking pressures arising now for a ‘full on’ house move during what looks like a testing 2022, we are indeed happy to respond positively to your plans.

guiding information 

Spotted online very recently by our team was a little ‘food for thought’ and some key guiding information from the always helpful HomeOwners Alliance…..take a look …and if we can help further do not hesitate to contact us.

First, the HOA highlight remortgaging to cover your extension. A re-mortgage, of course, involves transferring your mortgage from one lender to another. Say the HOA, “If you aren’t tied into any special introductory terms or reduced rates with early repayment charges, then re-mortgaging is an ideal way to increase your borrowing and lock into a better deal.

The Alliance also point out, of course, that in such an instance, you will, of course, need to prove you can afford the larger mortgage and you will need sufficient spare equity in your  property to get the new mortgage sorted..

switching costs 

The HOA indicate that one issue to be very aware of is to ensure you factor in any ‘switching costs’. But many deals will offer a free valuation and free legal work for remortgages, which helps to cut set up fees…which is good news.

scanning the ‘market’

Add the HOA team further,  “Speak to your lender about your options. But, also, speak to a mortgage broker who can scan the whole market and find the best deal for you. For more information go online for the HOA guide …https://hoa.org.uk/advice/guides-for-homeowners/i-am-improving/how-can-i-finance-my-home-improvement-project/?

additional borrowing 

A key question to be clear on is to weigh up carefully the opportunity available to increase your existing mortgage to pay for that new home extension, kitchen renovation or whatever plans you have in mind. As the HOA indicate, “If you have a really good rate with your current mortgage and you don’t want to lose it, or are tied into a deal with early repayment charges, you could consider additional borrowing from your existing mortgage provider. The rates may not be quite as good and there could still be fees, but it could work out to be the cheapest overall package”

asking why?

Lenders will of course ask you the reason for raising capital but should allow equity to be released – i.e. additional borrowing on your mortgage – for the purpose of home improvements. The Mortgage rates in question will vary depending on the percentage of the property your mortgage represents, (Loan to Value or LTV). 

limiting LTV 

Lenders will limit the LTV to which they will allow capital to be raised for home improvements, typically to 85% or 90% of the property value. That will be based on the current property value and not a predicted value after completion of the work. Bear in mind that the higher the LTV, the higher the interest rate will be.  

review

Of course, you can review the rate once any deal has come to an end. If the improvements have added value – and it is not advisable in most respects to spend the money if the work doesn’t add value – then, there may also be an improvement in the LTV which should, in turn, improve the mortgage options.

A second mortgage

Another option is to consider a second mortgage, also known as a ‘secured charge -loan’, from another provider. However, these loans usually carry higher interest rates. Add the HOA experts, “Be aware that increasing your existing mortgage, remortgaging to extend your borrowing and taking out a second mortgage, all involve increasing the amount of borrowing secured against your home. Make sure you are happy with the extra borrowing and the time period over which it needs to be paid back (usually 25 years)”

other ways to pay…

In addition to the above mortgage options, you might consider using an unsecured personal loan or even a credit card, depending on the sums required. Paying with a credit card can also offer additional protection, should your builder or other trades professionals go out of business. However, these will generally come at higher rates than mortgages, so it’s important to consider all the options, particularly for larger projects.

We, at Mint, are happy to discuss all key financial issues, including rates of payment and deposits for your home extension or renovation at the early planning stage of your project. It is important for you to have a clear grasp of your home improvement finances in all respects, including deposits and when payments for the project are required.

here to help

This will be dependent on timelines for your project and the various stages of work that we will need to undertake. We are – as always – here to help with your 2022 home extension or home improvement project plans.

We at Mint Builders are, of course, here to help locally with all the priority planning and organisation of your planned home extension or renovation on into 2022….including the key aspects of financing which will need to be engaged.

Feel free to request our project planning and quotation visit to refurbish or extend your home for more ‘liveability’ and increased future sales value in these continuing vaccination focused Covid crisis times. Contact Mint Builders on 07734 211958 or email mintbuilders@hotmail.co.uk