More homeowners are choosing to borrow additional money when remortgaging, suggesting that they are opting to spend money on home improvements rather than move home, recent research from Yorkshire Building Society reveals.
The research shows that there was a 12% increase in the number of homeowners choosing additional borrowing last year compared to 2017, and recent data from UK Finance reveals that the number of home movers has reduced by 48% since 2006. Yorkshire Building Society suggests that these stats show homeowners are looking to use some of the value in their home to make their current property work better for them as an alternative to moving.
Remortgaging is one way that homeowners can release money from their homes. However, homeowners need to be aware of the fees in order to remortgage and the increase in their monthly mortgage payments.
Another option for homeowners who need funds for home improvements, but who don't want to remortgage, is to use a secured loan.
In both cases your home is at risk if you fail to make your regular payments.
Yorkshire Building Society states that more homeowners could be looking to improve their homes rather than move due to the current economic uncertainty and a cooling in the housing market.
Janice Barber, mortgage manager at Yorkshire Building Society, said: "Whether it's building an extension to accommodate a growing family or a desire to renovate the kitchen, homeowners may naturally turn to personal loans or credit cards to finance home renovations. But our data shows an increasing number of borrowers could also be looking to the value in their property."
Michelle Monck, head of digital at Moneyfacts.co.uk, said: "If you're considering making home improvements and need finance to do this, then it's definitely worth considering a range of options. For example, if you need £10,000 for a large expense such as a new kitchen and are ready to remortgage then you could talk to your existing lender about adding funds to your mortgage. At the moment remortgage rates start from 1.58% for a two-year variable deal at 60% LTV.
"If you're not ready to remortgage then a secured loan starts from 3.57% at 65% LTV. Often, people think of using their credit cards or a personal loan and these can be good choices if used wisely. For example, taking out a credit card with a 0% interest rate on purchases can be a way to obtain low cost finance, but only where the balance is paid off before the 0% term ends."
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