What is Remortgage and How Beneficial for Home Improvements
Improving your home is both adding to the beauty of the interiors and also a change from the ordinary! Generally, it is said that remortgage for home improvements plans and financial ideas are cost-effective, and yes, they are, reasonable. Refinancing gets you a low-interest and a tax-free method to remodel your home, or even a certain part of your home like kitchen, bathroom, basement or anything that you wish to.
Let’s see how remortgage for home improvements exactly works and its benefits for you in the long term.
How Remortgaging works?
The process of remortgage is opted when there is a need for extra financing and or funds for certain purposes or when the current product is about to end and you are looking for better interest rate from different lender. Re-mortgaging helps homeowners getting better interest rate by changing their current lender. However, the re-mortgaging process includes the similar process as purchase including affordability.
Refinancing or remortgaging is when you can get better interest rate by changing lender, remortgage with capital raise to buy another property, home improvements or consolidate their personal debt (You should think before adding your personal debt to your mortgage). For instance, say you purchased your home for £200,000 and now, after a while your house costs around £245, 000. Well, after having the home for a couple of years, you would have paid your mortgage balance of around £160,000, which is certainly a profit.
In order to calculate your equity, you just have to subtract the mortgage balance from the property or home value. However, you won’t be able to take out the whole equity balance, as you have to keep certain percentage of equity in the property depending upon . Say, you have 70% to refinance your home, then the remaining 30% can be cashed out.
Of course, you need not worry about the taxes and interest rates. As it is free of taxes and does not incur too much interest rates as well, and also you can get remortgage advice in London.
6 Types of Home Improvement Loans:
#1 – Cash-out Finance:
This is one of the usual and popular ways people opt for remortgaging. You can easily refinance for home improvements with a big balance than you already owe and then you can pay off your due and balance with the existing mortgage and keep the rest in cash. Well, cash out finance is a good idea when it provides you with a lower interest rate than your mortgage value. However, cash-out finance comes with tax-free schemes.
#2 – FHA Loans:
FHA blends both home improvement and mortgage into one loan, which will get you lower interests. Such a loan type is safe and great when you know you have fixer-upper, means both for home purchase and home improvements. Also, only if you know, these loans are supported by the government which can get you other benefits too, you can always get better assistance from a suitable remortgage broker near me.
#3 – Home Equity Loans:
Home equity enables you to borrow against the equity that is built up, while the equity is calculated after assessing the value of your home, assets, and the pending mortgage and loans. Opting for home equity loans with the best remortgage advice in London could be a great idea if you have a high value of equity built up or when you need funds for a one-time, huge project.
#4 – HELOC:
Also known as home equity line of credit, which is similar to HEL, but mostly works like a credit card. It allows you to borrow up till a pre-approved limit, pay back and then again borrow, works exactly like a credit card. Yes, the interest rates are quite adjustable and are only applied to the outstanding balance not the entire loan line.
#5 – Personal Loans:
Personal loans are easily available when you opt for the best remortgage advice in London, also they come with a bit high interest rates as they are unsecured loans. You won’t be able to use your home or property as mortgage or collateral. Of course, these loans are instantly available, only if you have a good credit score and subject to affordability and lenders criteria.
#6 – Credit Cards:
If you have a good credit balance left on your credit card, then you can indeed use your credit card for home improvements and renovation purposes. Well, it is also the quickest finance option that doesn’t need any formalities or conditions.
Benefits of Remortgage For Home Improvements:
Remortgaging has some advantages too, which is profitable and somewhat looks up to a win-win situation, while you can take assistance from Mountview Financial Solutions, best remortgage broker near me in London & Essex. Here are a few benefits of remortgaging and how useful it could be for both sides.
- Lower interest rates are available at certain remortgage and refinance schemes such as HEL and HELOC.
- You also get the option and advantage of using your home’s or property’s equity for an additional cash, which is much better.
- You can also look up for all the available loan options and switch to those products that are more suitable to your financial condition.
- The flexibility to lessen your debts into monthly and affordable payments.
- The advantage of tax deductions and also on the interests that you pay back for your loans.
- Finally, your home value is increased after a certain several years of home renovations and improvements, which is indeed profitable for you.
Conclusion:
Mountview Financial Solutions, a remortgage broker near me can help you find best remortgage options for you as remortgaging and refinancing is an advantage to both the parties, especially if you are opting for renovations and improvements of your home, it becomes a great financial asset, increasing your home value. Our team of experienced advisors will help you finding the right product which suites your needs.