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Can I borrow more against my home for renovations?

By: Sean LaPointe | 10th June 2021

Planning some home renovations to spruce up your house and unlock its full potential? It’s likely that you can do a fair amount of home improvement using existing savings. But some big-ticket changes, such as a complete kitchen remodel, might cost far more than that. As a result, you might be wondering whether you can borrow more against your home to fund the project. We have the answers.

How can I borrow more against my home?

There are three ways to borrow more against your home.

1. Remortgage

To remortgage means to take out a new mortgage against your home, and use the money borrowed to pay off your existing mortgage. You can remortgage with your current lender or with a new one.

When remortgaging, you can borrow additional money on top of your mortgage to pay for the work that you need.

The lender will conduct an affordability assessment to determine whether or not to approve your application for additional borrowing, and the extra amount you can borrow.

2. Further advance

This simply means borrowing more money from your current mortgage lender. 

Worth noting is that the additional money you borrow will be secured against your property. It means that you risk losing your home if you can’t keep up with repayments.

3. Second charge mortgage

This is a form of secured loan that uses your property as collateral to borrow more money. More specifically, the equity in your home is used as security for another loan. So, in order to qualify for a second charge mortgage, you must have some equity in your home.

As with remortgaging, approval, as well as the amount you can borrow, will be determined by the lender’s affordability calculation.

There is no requirement to use the same lender for the second charge mortgage. However, in some cases, permission from the first lender may be required to obtain a second charge mortgage.

Is it a good idea to borrow more against my home?

This depends on your personal circumstances. There are pros and cons to borrowing more against your home to fund home renovations. The most obvious pro, of course, is that you get the money you need to cover your project.

As for cons, you are borrowing against your home, which puts it at the risk of repossession if you cannot keep up with repayments. That’s why it’s important to thoroughly assess your financial situation before you borrow more against your home.

Further, according to MoneySuperMarket, if you choose to get a further advance on your mortgage, this may affect your ability to remortgage in the future. You might need to pay a fee to leave your old mortgage contract, and this can take six to eight weeks to complete.

To determine whether borrowing more on your mortgage is a good idea and which option is best for you, consider speaking with a financial adviser first.

What are the alternatives to borrowing more against my home?

1. Unsecured personal loan

The main advantage of an unsecured personal loan is that, unlike remortgaging or further advance, what you borrow is not tied to your home, so there is no risk of losing it.

2. Credit card

A credit card can be a great option if you are only making minor renovations.

As with borrowing more on your home, first ensure that you can keep up with your repayments to avoid damaging your credit score.

Consider taking out a 0% interest rate card. These offer a set period in which you can make repayments interest free. But make sure you pay off the debt before the interest-free period ends and you are charged interest.

3. Equity release

Equity release is an option for homeowners aged 55 and above. There are two main equity release products.

The main advantage of equity release is that there are no repayments to make.


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