Remortgaging for home improvements

You can remortgage for more than you owe and take the extra as cash to fund home improvements, if you have enough equity and the borrowing is affordable. Spread over the mortgage term the monthly cost is usually low, but the total interest over 20 to 25 years can be high and the debt is secured on your home. Some work adds value and some does not, so do not assume it pays for itself. Compare a remortgage against a further advance and a short personal loan before deciding.

How it works

Releasing equity for improvements means remortgaging to a higher balance than you currently owe and taking the difference in cash. If your home is worth £300,000 and you owe £180,000, you have £120,000 of equity; borrowing, say, an extra £30,000 for an extension takes your mortgage to £210,000, still comfortably within the value. The lender checks the new, larger loan is affordable and usually asks what the money is for. Improving your own home is a mainstream, widely accepted reason.

Does the work pay for itself?

Sometimes, partly. A sensible extension, a modern kitchen or an extra bathroom can add value, though rarely pound for pound, and very personal or niche projects may add little. Treat any uplift as a bonus rather than the reason to borrow, because you owe the money whether or not the value follows. The safe way to think about it is: could you afford the larger mortgage even if the improvement added nothing to the price. If yes, the decision is about lifestyle and cost, not speculation.

Remortgage, further advance, or loan?

• Remortgage with extra borrowing. Best when you are due a new deal anyway and want one payment.
• Further advance. Extra borrowing from your current lender, keeping your existing rate on the main balance. Handy mid-deal, when leaving would trigger an early repayment charge.
• Unsecured personal loan. Often cheaper overall for a smaller job kept over a short term, and not secured on your home.
• Save and stage the work. Slower, but avoids interest and risk entirely.

Compare the total, not the monthly figure

Adding £30,000 to a 25-year mortgage feels painless month to month, but you pay interest on it for 25 years. The same £30,000 over a 5-year loan costs more each month and far less in total. Neither is automatically right: it depends on affordability, the size of the job and how long you keep the mortgage. A regulated broker can model a remortgage against a further advance and a loan on your real numbers. We introduce you to one. See also can I borrow more on my house.

Common questions

Rolling other debts in at the same time? Read the trade-offs in remortgaging to consolidate debt first.