At the moment in the UK, there seems to be an increase in the number of people asking to remortgage the property they have already, rather than look for a new house and a new mortgage. Remortgaging your property is basically where you find another lender who is willing to lend you the amount you already owe on your current property plus the extra amount you need to do the home improvements.
Recently however in the UK, we have just seen in July 2018, a rise in interest rates after a very long time (since 2009 actually when they were dropped to try and help the UK out of recession). Lenders such as Nationwide have had to adjust their rates to reflect this. This is not so much of a problem for those on fixed rate mortgages, and if considering remortgaging, going for a 5 year fixed rate at the moment is probably the best way to go with the current uncertainty regarding Brexit. Those with a variable rate mortgage would have already seen an increase in their monthly mortgage repayments.
Due to a very uncertain Britain with the whole situation with Brexit and people not really knowing from one day to the next what is actually happening, people are not sure whether to sell their properties or stay put and wait and see what the outcome will be. As the saying goes however, ‘when in doubt, do nowt’ and that is what people seem to be doing with house moves. The housing market in the UK is not going up as it usually does, in fact in August 2018, fell month on month by 0.5%. In the case of a ‘no deal’ Brexit, some banks are even saying the housing market will fall by a third. Housing prices usually rise in accordance with wages and wages could actually go down after Brexit, hence making this impact on the housing market. This is another good reason to take out a fixed rate mortgage now as the Bank of England is not sure how they will handle the situation should interest rates have to keep on rising. They themselves at present cannot predict exactly what will happen.
So therefore, taking these factors into consideration, it seems people are deciding on staying in their current properties and making home improvements, whether it be landscaping, extensions, new kitchens or new décor and are remortgaging in order to do so, hoping for a return on their investment one day when the property prices will rise again and then they are in a better position to sell and will get more for their property than they would now. Depending on the home improvement being done, you should make your money back and hopefully some more on top. Lenders will ask what the extra money you want to borrow is for.
Remortgaging may also help you find a better deal on your mortgage repayments than you are currently paying. So it pays to look around anyway and look for a lender who will have lower rates and lower monthly repayments. This can be especially beneficial if the value of your property has gone up since you bought it, as your equity will now be larger and the lender will not be taking so much of a risk, therefore bringing the rates down. So even if you do not want to any home improvements, it may be worth having a look on a comparison site to see if you could save money by remortgaging as they can be taken out just to replace your existing mortgage as well as a way to borrow extra money.