Last Updated on December 16, 2020
Can a Mortgage Include Renovation Costs? UK Homeowners Guide
Despite a difficult 2020 for the financial industry, the demand for mortgages in the UK rose to a 13 year high as the number of people wanting home loans continued to boom.
Bank of England figures (1) proved that there we close to 100,000 loans approved by lenders in October 2020 alone, and the figures show no sign of slowing down just yet with stamp duty now abolished for first time buyers.
Many of those buyers will be hoping to spruce up their new properties as well, which leads us to the question “can a mortgage include renovation costs in the UK?”.
The answer is far from straightforward, which is why we’ve put together this guide to answer that all important home owning question.
Table of Contents
Can you get an extra mortgage for home improvements?
In a nutshell, a mortgage is for the purchase of a property, so lenders won’t tend to give you anything else in a mortgage to help pay for home improvements.
When it comes to applying for a mortgage, your provider will do their research on the cost of your new house. For example, if you’re planning to buy a property for £200,000, but you need another £50,000 to help improve it, you’ll find that your lender might turn you down.
Basically, with any mortgage that you take out on your property, the bank or lender technically owns your home until you’ve fully paid off your mortgage, which is why they won’t be interested in giving you any extras. You may find that some specialist mortgage providers will look to add on some building costs, but you’ll have to do some thorough research to find out if they will fit your circumstances.
With most mortgages, banks and other lenders will usually give you a maximum of 95% of what you purchased your property for. That means, that even if you think the house has the potential to be worth so much more, you’ll have to find another way of paying for the improvements you have in mind.
How else can I pay for home improvements?
So, if adding extra on to your mortgage is out of the question, you’ll need to find another way of paying for the home improvements.
If you don’t already have the cash saved up, then there are a few other payment options which your bank or lender may be able to help you with. From personal loans to credit cards or even overdrafts, there are a number of options to choose from when it comes to lending the money.
Of course, these are a form of debt, so make sure you know what the interest rate is and when you need to make the repayments. You don’t want to have made all the improvements to your new property and then not be able to enjoy them because of your rising debt costs.
Home Improvement Advice
Looking for the right kind of deal on both a mortgage and any kind of home improvement is never easy. That’s why Loftera are here to offer their advice and help along every step of the way.
We’ve got decades of experience in the industry and can point you in the right direction when it comes to finding the right professionals in every area of improving your home.