New figures show that homeowners across the UK are now borrowing more money from mortgage lenders than ever before to fund home improvements.
According to mortgage broker Mojo Mortgages, the average amount of money being applied for by existing homeowners to fund renovation projects has increased by just over £13,000 (up 25%) over the course of the pandemic – rising from an average of £52,209 in 2019 to £65,267 as of August 2021.
It’s not just the amount of money being borrowed per applicant that’s risen – the amount of people looking to borrow has also seen a significant uplift, with remortgage applications for home improvements up 174 per cent for the year so far – when compared to this time in 2019.
Experts believe there are several factors behind the rise in total applications and the amount of funds being applied for with record low mortgage rates alongside the rising costs of building materials and labour, as well as more ambitious projects creating the perfect storm for remortgage applications.
Cassie Stephenson, director of mortgages at Mojo Mortgages, said: “After such an uncertain 18 months you might have thought that purse strings would have tightened from both homeowners and lenders, however in many cases this has been the complete opposite.
“With people spending more time in their homes than ever before, homeowners have had the time to imagine their dream property and the steps required to make this a reality as society opens up and returns to normality.”
Mojo Mortgages explained: “You take the amount left on your current mortgage and add the cost of your home improvement project, then apply for a remortgage for the total amount.”
Similar to a loan, this allows you to pay back the cost of your work over a longer period with the benefits of significantly reduced rates of borrowing.
13 steps on how to use a remortgage to fund home improvements
- Estimate your total costs of the work required – make sure to obtain quotes from multiple sources to ensure you get the best deal
- Work out the remortgage fees required – remember to include any costs for architects, planning permission, building regulation certificates and of course VAT (20%)
- Explore what remortgage rates you could get with additional borrowing – a mortgage broker will be able to do this for you
- Get a before and after valuation on your property to check what difference any work will make
- Obtain official quotes for the work and add up all additional costs
- Decide if you want to go ahead with the work
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- Decide if you want to fund it via a remortgage
- Apply for your remortgage – speak to your mortgage broker and confirm all the details and figures
- Choose a lender and submit your application with all the relevant documentation – some lenders depending on the amount you want to require will ask to see builders’ quotes
- Wait for the valuation and underwriting process to be complete
- Get your approval and receive your funds
- Complete your work and enjoy your new home
- Don’t forget to obtain all the certificates you need for when you come to sell your property in the future
For a full guide on how remortgaging for home improvements works and how to secure the best deal, visit the Mojo Mortgage website here.
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