Let’s talk finance.
When it comes to making significant changes to your home, either through an extension or renovation, it’s likely you’re going to need a good chunk of cash to get this project off the ground. For many homeowners, this means taking out a loan.
However, not all lenders are created equal, especially when it comes to home improvement. At Resi, we firmly believe the best care and deals are found through brokers who specialise in residential projects. However, don’t just take our word for it.
Here are all the reasons having a specialist makes a very special difference to your finances…
What is a specialist lender?
First things first, what do we mean when we say ‘a specialist lender’?
There are many varieties of specialist lenders and they’re often brought up in terms of specialist mortgage options. For example, if you’re self-employed or have a bad credit history, these brokers can create bespoke mortgage offers to allow you to get onto the market or borrow against the equity in your home.
However, in this article, we’re focusing on one specialist lender in particular - brokers with architectural/housing expertise.
Our Resi Finance team is made up of in-house brokers who combine knowledge of both lending and home value, who can bring together the right deals with the ins and outs of home improvement. We also work in partnership with the Mortgage Advice Bureau, another example of a specialist lending service.
Learn more about Resi Finance.
Understand your budget requirements early on
By having a specialist lender by your side from the start, you should be able to work with them to properly map out your budget requirements.
At Resi, we do this by having our brokers work with your design team, who are able to provide expert judgement on the finances required to make your project a reality. This will include not only your construction costs, but also materials, fees of other specialists needed for building regulations, plus contingency.
Learn more about what goes into a project’s budget here.
Only by properly understanding your budget requirements can you borrow safely. Otherwise, should your loan fall short, you run the risk of having to cover added expenses from either your savings account or having to opt for a high-interest short-term loan.
Get your equity working harder
One of the most cost-effective options to fund a renovation project is to consider releasing this equity from your home by way of a remortgage or further advance.
In essence, this would see you increase the level of borrowing you have against your home (your mortgage). For example...
- If you have a property worth £300,000 with an existing mortgage of £150,000 over a 25-year term with an interest rate of 1.5%, your monthly mortgage payments would be in the region of £600 per month.
- Now using the same scenario, if you released £30,000 towards a renovation project, your mortgage amount would increase to £180,000. Over a 25 year term with an interest rate of 1.5%, your monthly mortgage payments would be in the region of £720 per month.
So, for an extra £120 per month, this homeowner would now be able to start their project and enjoy the result that much quicker.
With a specialist lender by your side, they’ll not only consider the current equity in your home but also it’s the future value. After all, by improving your home, you’re essentially increasing its value (or, at least, you should be) and this added worth can be used to get you the right rates for your project.
One of the potential problems with using a high-street lender is that without an understanding of the value your project will create, they base their lending strategy solely on what your home is worth today. But to get the right results, you need a specialist lender who can see the big picture.
Protect your investment
It seems obvious but you would be surprised by how many homeowners fail to properly protect their investment. Luckily, a specialist lender should be perfectly placed to advise not only on finance but insurance too.
Our brokers will guide you through both the policies your contractors should be taking out, and what insurance you need to manage from your end.
In most cases, this will include…
- Home insurance
- Structural warranty
- Life insurance
Learn more about insurance.
A specialist lender will also be able to evaluate and suggest policies on the market at the moment, so you don’t end up overpaying in order to keep your home safe.
See how much you could borrow
Has all this talk of lenders got you curious about your own options? If you’ve been considering giving your home a makeover but aren’t sure how much money you’ll have to work with, then try our loan calculator.
Simply fill out your details and we’ll compare the latest market rates for loans to transform your home!
Please note:
- You may have to pay an early repayment charge to your existing lender if you remortgage.
- Your home may be repossessed if you do not keep up repayments on your mortgage.
- There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee is £495.
