What is the best type of loan to get in order to finance home improvements?
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nandoDave
2 years ago
Expert Financial Adviser Answer
Darren Smith
answered 1 year ago
Often the cheapest form of loan would be secured as a mortgage on your home with your current lender (if you are tied in) or you could seek to remortgage to a new lender and increase the loan as you move but....
lenders price their deals based on the % debt to the their appraisal of its current value and so you might do better to sort the deal on your existing balance and then top up the mortgage afterwards as this will nearly always be cheaper if the new higher mortgage ends up pushing you into a worse payment band.
for example
£140000 mortgage on a £200000 home might get a deal of say 3% (£350 pm) but if you want £25000 more for home improvements you might only be offered 4% on the whole amount (£466 pm on the current £140k and then another £83pm on the extra £25000).
Having said that, some lenders dont allow further borrowing on new mortgages until 6 months have passed from the account opening so a good IFA will help you to work all this out in advance.
If you are lucky enough to have sufficient equity in your home to borrow all in one go, then all the better.
But if you
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lenders price their deals based on the % debt to the their appraisal of its current value and so you might do better to sort the deal on your existing balance and then top up the mortgage afterwards as this will nearly always be cheaper if the new higher mortgage ends up pushing you into a worse payment band.
for example
£140000 mortgage on a £200000 home might get a deal of say 3% (£350 pm) but if you want £25000 more for home improvements you might only be offered 4% on the whole amount (£466 pm on the current £140k and then another £83pm on the extra £25000).
Having said that, some lenders dont allow further borrowing on new mortgages until 6 months have passed from the account opening so a good IFA will help you to work all this out in advance.
If you are lucky enough to have sufficient equity in your home to borrow all in one go, then all the better.
But if you
