Should You Apply for a Remortgage for Home Improvements?

Category: Finance

Remortgaging is a significant financial decision, one that will impact your finances and your lifestyle in the long run. If you would like to carry out a renovation, but you lack cash, you can consider a new loan. Remortgage for home improvements is a common type of land and it has multiple benefits.

Debt consolidation remortgage is also very popular among individuals with multiple debts who would like to consolidate all of their loans into one.

What To Consider Before You Apply for Remortgage for Home Improvements?

Carrying out different house repairs can be quite expensive. Unfortunately, most people cannot afford them without taking out a new loan. Individuals who need to fund a home improvement and cannot save up money can apply for a new loan. Remortgage for home improvements is a good solution for property owners who find it impossible to save money to renovate their house.

If you are among them, before you apply for a remortgage you should consider the following:

• Your current financial situation- lenders will assess your financial situation, especially your income, employment status, job security, debts and credit history.
• Your payment history on the existing mortgage- individuals with late or missed payments might not qualify for such a loan or if they do their rates will be higher.
• Affordability- if the amount of the mortgage loan increases, so will your monthly payments. You might be able to borrow four or six times your salary.
• The scale of the renovation- the condition of the home and the type of renovation you want to make will impact the amount of money you can borrow.
• Timing- if the value of your property has increased, this is to your advantage. You should consider a remortgage and chances are you will benefit from a cheaper interest rate.

When Is Debt Consolidation Remortgage a Good Option?

Individuals with various debts who struggle to manage them should consider a debt consolidation remortgage. Debt Consolidation remortgage is a good solution for people who want to manage their debts easier. Loans secured against a property are cheaper and people who choose a consolidation loan can significantly reduce their monthly expenses.

Provided you have enough equity in your home, chances are you will qualify for such a type of loan.

What Are the Eligibility Requirements for Mortgages?

As a borrower, there are several criteria that you have to meet. Lenders will check your affordability and eligibility, ensuring that you can afford the new loan. When it comes to the credit history, some lenders are stricter while others have more flexible conditions. It is important to have a good credit history, to have a steady income and to be able to prove that you can repay the loan.

Whether you need a debt consolidation remortgage or another type of loan, you should make sure that you qualify for it. According to an interesting article in Times, "The value of your home, size of your mortgage, your repayment history and the extent of the renovation work will all have a bearing on your ability to refinance your property. "

Which Are the Things that Can Stand in the Way when Applying for a Remortgage?

Borrowers should know what to expect before they decide to apply for a remortgage. The following can prevent them from obtaining the loan they need and they should be dealt with:

• Having too many debts- if you have too many loans, you will be treated as a high-risk applicant and if you qualify for a loan the fees you will pay will be higher
• Imperfect credit- it is common knowledge that credit history matters for lenders. Make sure you check your credit score and you do your best to improve it before you apply for a remortgage.
• No credit history at all- lenders want to see that you are responsible with your finances
• Self-employment- if you are self-employed, it might be more difficult for you to offer proof of financial status and income.
• Applying for too much- it is important to establish from the start how much money you need and how much you can afford to repay. Should you attempt to borrow too much your application is likely to be declined.
• Major changes in your life- stability is important to lenders and major changes in your life such as divorce, new job, relocation can impact your chances of obtaining the loan.
• Application errors- unfortunately, too many mortgages are declined because of application errors.
• Applying for a debt consolidation remortgage to the wrong lender

Which Are the Advantages of Remortgage for Home Improvements?

Home improvements involve significant expenses and most people cannot seem to be able to save enough money for them. As such, the only option they have is to opt for a remortgage for home improvements. This brings the following advantages:
• It enables you to obtain the money you need for the home improvement and to benefit from a rate with low interest
• Interest rates are quite low compared to those available for other types of loans
• The money can be used for pretty much any purpose
• You can borrow up to 85% of the value of your home provided you have enough equity.

How to Determine if a Remortgage is the Best Option for You?

Before you start searching for lenders and for available types of loans that cater to your requirements, you have to be sure that this is the best option for you. Before you go any further with your remortgage for home improvements, you should make sure:

• You have enough equity in your home
• You will be able to make the repayments so that you do not risk losing your home
• You know the exact costs involved in remortgaging
• This is the best alternative for your particular situation

What Are the Risks of Remortgaging?

Just like with any type of loan, debt consolidation remortgage has its own risks: you can lose your house should you fail to make the payments; you will pay loan fees, it will prevent you from being a debt-free owner and loan qualification conditions depend greatly on market conditions, the income you have and your credit history.