Renovating your home can be the ideal way to unlock its full potential and help you achieve the property you’ve always dreamed of.
Renovations can be expensive and challenging but are ultimately worthwhile and usually cheaper than the cost of moving. There are various ways you can fund your home improvements and, at Trinity Finance, we can help you choose the best option to suit your needs.
Before seeking finance
Whether you’re looking to install a new kitchen or bathroom, carry out a loft conversion, make upgrades to improve your home’s energy efficiency or add an extension, you must ensure you have budgeted correctly before deciding which funding option is best for your home improvement project.
Compile a list of all the works you want to have carried out and be sure to obtain quotes from a few tradesmen. Compare these quotes in detail, noting the tools and materials they intend to use and how the project will be managed. If you’re carrying out the renovations yourself, ensure you have allowed for all of the tools and materials you will need. This is important because the costs can easily mount up if the works are not properly calculated.
How can you finance the renovation work?
Once you have a budget in mind for your project, you need to obtain the finance. If you have savings available, it makes sense to use them rather than taking on new debt. Alternatively, you may be able to use a credit card that offers 0% finance although you are restricted to the credit limit. A credit card also provides additional security against faulty purchases or in the event the company you’re using to complete the work goes out of business. However, for substantial renovations, you’ll likely need to borrow a larger amount and this is where we can help.
At Trinity Finance, we have a team of skilled and experienced professionals located throughout Kent, London and Edinburgh who have helped many homeowners finance their property dreams and are ready to help you with yours. There are various ways you can finance the renovation work, including:
- A home improvement loan
- A further advance
- Remortgaging
- A second charge mortgage
- Equity release for older homeowners
The last four options are dependent on you having equity in your property. This is your home’s current value minus the outstanding balance of your mortgage. All being well, the longer you have owned your property, the higher your equity should be. This is because you will have repaid more of the mortgage and, hopefully, the market value of your property will have increased over time.
Our expert financial advisers can discuss the different options with you to secure the right type of funding for your home improvements. They will check your financial position and take your preferences into consideration when evaluating the various choices. Get in touch with us on 01322 907 000 for specialist guidance and be assured that we can search for the best deal on the market as we are not tied to specific lenders. If it’s out of office hours, simply send an enquiry to us via our contact form and we will reply to you as quickly as possible.
A home improvement loan
A home improvement loan is a type of personal loan, which is usually unsecured so that your home isn’t at risk if you fail to keep up with the repayments. It’s faster to apply for this type of loan than for a further advance, remortgage or second mortgage and you usually receive the funds very quickly. You also repay them over a short term, such as 1, 3 or 5 years.
A further advance
If you’re looking for a larger sum, have equity in your property and want to spread the repayments over a longer term, a further advance is worth considering. This is effectively a way of topping up your current mortgage as you are requesting additional funds from your existing lender. This option may be appealing if your current mortgage has a good rate or you will have to pay early repayment charges if you change your mortgage deal.
As you are staying with your current lender, a further advance should be faster to arrange than a remortgage. The conditions and rate of your current mortgage should stay the same but you will likely pay a different rate on the amount borrowed for your further advance. This may be higher or lower than your current mortgage rate and it may be a fixed rate or a variable one. Make sure you are aware of the different aspects relating to each element, including when the early repayment periods end and any fixed-rate periods.
Remortgaging
Remortgaging to release equity from your property to carry out home improvements is another good option. In this case, you transfer your mortgage to a new lender but take out a bigger loan. The amount the lender agrees to loan you will depend on the equity available in your property and the results of their affordability checks. This is a good opportunity to find a mortgage deal with a better rate or more flexible terms. Don’t forget to factor in an early repayment charge from your existing lender as well as any additional charges involved with the process.
A second charge mortgage
This is a secured loan that acts as a second mortgage in addition to your existing one. You apply for it via a different lender and the amount that can be borrowed depends on the equity available in your property as well as the lender’s affordability criteria. A second charge is a good option if your current lender won’t agree to loan you the extra amount you require under the existing mortgage terms. You may also benefit from a good rate with your existing mortgage that you don’t want to lose if you remortgage.
The second charge rate may be a higher amount than that of your current mortgage but it’s typically below the rates associated with unsecured loans or credit cards. As well as that, the repayments are made across a longer period, such as up to 25 years. As with a further advance, make sure you can comfortably afford two monthly repayments and the extra fees involved.
Equity release for older homeowners
If you’re over 55, you can use some of the cash tied up in your home via equity release. The most popular equity release product is a lifetime mortgage and this allows you to receive a tax-free lump sum or a smaller sum initially with further payments as and when you need them. The loan is secured against your home but the benefit is that you don’t need to make any monthly repayments. Unlike a standard mortgage, your loan isn’t repaid until you either move into long-term care or die. This means you can make use of your equity to pay for home improvements and have peace of mind that you can continue living in your home for the rest of your life without worrying about monthly mortgage repayments.
The interest on this type of loan is usually compounded and the downside to this is that the debt builds up quickly, reducing the value of your estate for your beneficiaries. Some lifetime mortgage plans, however, allow you to make monthly interest payments, which will reduce the overall amount owed. You can also choose to ring-fence some of your property’s value for your beneficiaries. We also recommend that your plan has a ‘no negative equity guarantee’ so that your estate is not liable for more than the value of your home when it is sold.
We can help you secure funding for your home improvements
At Trinity Finance, we understand how renovations, no matter how big or small, can transform your home and the importance of being able to fulfil them to meet your expectations. We have extensive experience helping clients to secure the right funding for their home improvements and are sure we can help you too.
Just give us a call on 01322 907 000 for professional guidance on financing your home renovation project. Our specialists, located throughout Kent, London and Edinburgh, are highly experienced in this field and will ensure you benefit from the best deal to suit your needs. Alternatively, send an email to us at info@trinityfinance.co.uk or an enquiry via our contact form. We will reply to you as quickly as possible with more information.