When it comes to home improvement, many of the changes you might wish to make to your property can be pretty costly. From time-consuming and expensive extensions to extensive renovations, there are several ways in which home improvement can hammer your bank balance. This doesn’t have to be the case, though.
If you seriously need to improve your property, or you’ve got a dream layout in mind and want to make it a reality, then two options should immediately jump out at you: remortgaging your home and taking out a second mortgage. Neither of these is as scary as it sounds; in fact, they can both provide the financial injection you need to begin those all-important home renovations, and they can be pretty simple to set up, too. We’d strongly recommend that you Research Second Mortgage Loans and remortgaging; going into the process armed with information is incredibly helpful.
Remortgaging your home is pretty self-explanatory: you simply take out a new mortgage on your existing property with your current lender. This mortgage will be the combined value of your existing mortgage and however much you need to borrow. Let’s say you had £100,000 left on your mortgage. If you needed £15,000 for your home improvement programme, then you’d need to remortgage for £115,000.
Remortgaging has some benefits and some drawbacks. On the plus side, remortgaging allows you to borrow at a lower interest rate, so the payments won’t pile up quite as much. In addition, you can utilise your home’s equity in order to get more money. Equity might sound complicated, but it’s just the difference between your home’s current market value and the mortgage payments you’ve got left to make.
What this means in home improvement terms is that you’ll have a bit more cash to play with, and it’s compounded on top of the original mortgage you took out, so if you trust your current lender then this is a great way to get money for your DIY Project. Of course, it has drawbacks too. Remortgage loans are secured against your home, so if you can’t pay, it’s possible that your home could be repossessed. In addition, remortgaging is often accompanied by severe fees, and can take a number of weeks, so you’ll need to be 100% sure this is what you want to do before you go ahead.
Your other option when it comes to home improvement loans is a second mortgage. This second mortgage would be determined by your home’s equity, so the higher your equity, the more money you could stand to borrow. As a second loan taken out with a separate provider, this second mortgage can often be a much higher amount of money than you’d get if you remortgaged, and can be stretched out over a longer period of time, resulting in smaller payments month-by-month.
If you’re looking to improve your home, then this could be the perfect option for you. A higher cash injection means more money to play with to Create Your Dream Home, and with less to pay each month (but not overall), you’ll feel the sting of it a little less initially. Of course, there are drawbacks here too. A second mortgage, just like remortgaging, is secured against your home, so failure to pay could still mean repossession. In addition, the payments are completely separate to your original mortgage, so you’ll need to make sure these payments sync up and are both manageable for you (especially if you’ve borrowed a higher amount than you would have with remortgaging).
Both remortgaging and second mortgages have significant drawbacks and positives. We’d urge you to think carefully before you make a decision, as it will affect you and your property in the long term. That said, both of these options can be compelling for home improvement, so your perfect home could be just a phone call away.