How does a remortgage to release money for home improvements work?

ruru451

Hello! I'm a bit clueless about the whole remortgage thing so looking for some help/advice. We bought a house valued at £200,000 for £175,000 and we put down a 10% loan so therefore took out a mortgage for £157,500. The house is/was in desperate need of updating so we have already put in a new kitchen, bathroom and re-decorated and had a rewire to bring electrics up to date. However, we would still like to add 2 dormer windows, fit a whole new bathroom, change 1 large room into 2, add an en suite and walk-in cupboard into one room and add a utility room extension on to house! (Not much then hehe).
We don't have the finances to do this but am I right in thinking we can remortgage to release funds to do this? Perhaps £30,000 to cover?
If so how do we do this? Can we get different workmen to do each job? Or do we need one contractor?
Our mortgage is fixed til jan 2016. So we won't do anything til a few months before then but just looking for some info??
Thanks in advance

Million_Percent

Basically you are just taking out a new mortgage on your property. You are free to do what you like in terms of what builders you use what or home improvements you wish to make.

Lets say you owe £157000 and the house is worth £200000. That gives you £43000 positive equity. The maximum mortgage you'll likely get is 95% LTV so £190000. So you could in theory take a new mortgage for £190000, pay off the old mortgage of 157000 and that will leave you with £33,000 to use for your renovations. There may be product fees and valuation fees on your new mortgage and you should check if there are any early repayment penalties on your current mortgage. If you are using a broker there will likely be fees there too but it's worth doing because they have access to products that are not available for direct application.

dimbo61

Now we have no idea what you and your other half earn but you need to see if you can even get a bigger mortgage.
You are in a fix till Jan 2016 so need to read the paperwork to see what ERC you would pay if you changed lenders before then.
You paid £175K for a £200K property SAID WHO ?
Any surveyor will look at recent sales when he comes to value your home and most recent is your place at £175K !!!!!
He/she will also look at the work done if it is not a drive by or desk top valuation !
Have you added value ? New kitchen maybe, New bathroom maybe, total rewire helps when selling.
Big extension with extra room YES but even then you might spend £50,000 to add £49,000
Property development is not a get rich quick way of making money.
Remortgage fees and other costs plus lenders strict lending policy may mean No Extra borrowing. 95% LTV very tough to get.
Just plod along doing the work as and when you can afford.
Think outside the box !
Rewire and make sure extra plug sockets in every bedroom and into loft if Room ?
Will splitting a big bedroom make two small bedrooms.
En-suite can add value if Room and done well.

SuperSaver123

dimbo61 wrote: »

You paid £175K for a £200K property SAID WHO ?
Any surveyor will look at recent sales when he comes to value your home and most recent is your place at £175K !!!!!
He/she will also look at the work done if it is not a drive by or desk top valuation !

Why don't you get a local estate agent to come and value the house and then see where you are standing with possible value?

Even if you haven't had many sales in your area (like in our case) they will give you an idea and then you will see more realistically how much equity you have in your home to release.

Foxy-Stoat_3

Speak to your lender about remortgaging nearer the time and get them to tell you what they think the property is worth through their index linking.

You MAY be able to pull equity out for repairs subject to affordability upto 80% LTV.

If your fixed until Jan 2016 I would save as much as you can in the next 18 months so you wont need to release as much equity, unless you want to pay exit fees as well.