“Is equity release good for home improvements?” This is a common question from potential buyers as they consider taking out a mortgage. Equity refers to any cash savings on your mortgage that you are able to take advantage of. By remortgage your house, you are able to release any existing equity in the property to add to your desired home developments. Any equity that you have is the difference between the current value of your property and the amount left on your mortgage, so obviously how much equity you are able to take out depends largely on how much equity you already have. However there is an additional benefit to be gained by taking out an equity release mortgage.

Up to three quarters of your mortgage could be released by way of a refinancing deal. Remortgaging allows you to lock in at much better rates than you would get with a conventional mortgage. For many homeowners this means lower monthly repayments. If you can qualify for the refinancing scheme then up to five years of payments can be reduced to as little as two or three years. The longer you make repayments on your mortgage, the more equity you build meaning greater financial benefits when you decide to sell your house.

Many homeowners are surprised to find out that their loan providers actually offer equity remortgage deals. Many lenders offer their customers the opportunity to take out this type of mortgage when they need to make some home improvements in order to make the house more suitable for living. The purpose of this mortgage is not always to improve the property but to improve the market value so that it is more attractive to potential buyers. It can also be used for improvements that enhance the look and feel of the property. Some lenders also offer the facility to remortgage on top of this mortgage if a homeowner has other properties. This is usually a requirement for borrowers with multiple income sources.

Before going ahead with the mortgage, check with your lender whether they will allow you to remortgage via a mortgage broker. If you choose to go this route, you should request the mortgage quotes from a number of different lenders so that you know you are comparing apples to apples. It is also worthwhile getting quotes from at least three mortgage brokers so that you are aware of any differences between them.

If you choose to apply for a remortgage and choose to proceed through a mortgage broker then you may need to find another source of funding to provide the funds needed to complete the proposed work. One such source of funding could be a loan taken out at a local provider of small business finance. A small business lender will usually allow borrowers to borrow up to a certain amount of money. In some cases a borrower can borrow up to double the value of the property which is being mortgaged. The advantage of this type of borrowing is that a borrower does not have to worry about finding a lump sum of cash in order to pay for their home improvement project.

Another option for those who wish to carry out home improvements and whose income is not sufficient to afford a traditional personal loan is to apply for a cash advance or home equity line of credit. With either of these options a borrower is borrowing against the equity in their property. The rate of interest that will be offered is determined by the lending company. If your circumstances are suitable you could get a low rate of interest on the borrowing. However, bear in mind that this form of borrowing is only suitable for very serious needs as the repayments will need to be made in fairly short terms.

Equity release is another way of paying for home renovations that may not be viable on traditional loans. By borrowing against the equity in your home you could borrow up to a set amount. Once the agreed upon amount has been paid back then the remainder of the mortgage will revert to the lender. The advantage of this form of borrowing is that it is secured against your mortgage. However, if your mortgage is at risk due to your poor financial position then your home renovations project could be delayed for quite some time.

One final example of a borrowing product that is commonly used for home repairs is that of a Loft Conversion. As this is a relatively expensive home improvement procedure it is often only undertaken by those with access to very generous budgets. In order to fund a loft conversion project, a mortgage lender will typically require a borrower to have equity in the property that can be accessed through a lease. The benefit of such loans is that they are very flexible and can suit a wide range of borrowers. In order to apply for a loft conversion remortgage one would need to contact a specialist broker.