Remortgaging for home improvements means replacing your current mortgage with a larger one, using the extra money released to pay for building work. Instead of taking out a separate loan, you borrow against the equity you have already built up in your property, often at a lower interest rate than a personal loan.
If you are planning an extension, a loft conversion, a new kitchen, or any other significant renovation, remortgaging is one of the most common ways UK homeowners fund the work. This guide explains how it works, what it costs, and how it compares to your other options. For a full overview of what remortgaging involves, see our separate guide.
Table of Contents
Your three main options
Before deciding whether to remortgage, it helps to understand the three ways you can borrow money for home improvements using your property.
Option | How it works | Best suited to |
Full remortgage | Switch to a new lender and take a larger mortgage. The new loan pays off the old one; you receive the difference. | Homeowners at or near the end of a fixed-rate deal, or where a new lender offers a significantly better rate. |
Further advance | Borrow extra from your existing lender, at a separate interest rate, without changing your main mortgage. | Homeowners mid-way through a fixed-rate deal who want to avoid early repayment charges. |
Personal loan | An unsecured loan, usually up to £25,000, repaid over a shorter term. | Smaller projects where you want to avoid securing the debt against your home. |
Key things to check before you apply
Equity. Equity is the difference between your home’s current market value and the amount you still owe on your mortgage. You need enough of it to cover both the extra borrowing and the lender’s maximum loan-to-value limit (most lenders will not lend against 100% of your property’s value).
Early repayment charges (ERCs). If you are in the middle of a fixed-rate mortgage, switching lenders before the deal ends will usually trigger an ERC. These can run to several thousand pounds. Check when the right time to remortgage would be before committing to a switch.
Affordability. The lender will assess whether you can afford the higher monthly repayments on the larger loan, taking your income and outgoings into account.
Impact on total interest paid. Spreading the cost of renovations over a 20 or 25-year mortgage term reduces monthly payments, but you will pay more interest overall than you would on a shorter-term personal loan.
What fees should you budget for?
Remortgaging for home improvements is not cost-free. The main charges to be aware of are:
- Early repayment charge – payable to your current lender if you leave before your fixed-rate period ends.
- Arrangement fee – charged by the new lender, typically £999-£2,000, sometimes added to the loan.
- Valuation fee – the new lender will value your property before releasing funds.
- Solicitor/conveyancing fee – legal work is required to transfer the mortgage. See our guide to remortgage conveyancing for what this involves.
A full breakdown of what remortgaging costs in total is available in our remortgage fees guide.
What will a lender look at?
Lenders assess three main things when you apply to borrow more:
Loan-to-value (LTV). This is the total amount you want to borrow as a percentage of the property’s value. The lower your LTV, the better the interest rate you are likely to be offered. A remortgage valuation confirms the figure the lender will use.
Affordability. You must pass the lender’s income and expenditure checks for the new, higher monthly payment.
Property type and planning permission. If your project involves structural changes, the lender may ask for evidence that planning permission has been obtained before approving the extra borrowing.
How to remortgage for home improvements: step by step
- Get detailed quotes from builders. You need a firm figure for the total cost of the work before approaching a lender.
- Calculate your available equity. Subtract your outstanding mortgage balance from your home’s current market value.
- Check your existing mortgage for early repayment charges. Contact your lender or check your original mortgage offer.
- Speak to a mortgage broker. An independent adviser can compare a further advance from your current lender against switching to a new one, factoring in all fees.
- Submit your application. You will need to provide proof of income, recent bank statements, and details of the planned renovations.
- Property valuation. The lender will arrange or ask you to arrange a valuation of your property.
- Funds released. Once approved, the additional money is transferred to your solicitor or paid directly to your bank account. For a sense of the timeline involved, see how long remortgaging takes.
Work out how much you could borrow
The amount available to you depends on three figures:
- Your home’s current market value – an estate agent or online tool can give you an estimate.
- Your outstanding mortgage balance – available from your lender or mortgage statement.
- The lender’s maximum LTV – typically 80-90% of the property’s value, though this varies by lender.
Example: If your home is worth £300,000 and you owe £180,000, you have £120,000 in equity. If a lender will go up to 80% LTV, the maximum they will lend is £240,000, meaning you could release up to £60,000 on top of your current balance, subject to affordability.
The renovation itself may also increase your home’s value. An extension or additional bathroom, for instance, can add more to the market value than it costs to build, which in turn improves your LTV position.
What are the risks?
Your home is security for the loan. If you stop making payments, the lender can repossess your property. This risk applies whether you take a full remortgage or a further advance.
You will pay more interest over time. Stretching renovation costs over a mortgage term of 20 or more years means you pay more in interest than you would on a shorter loan, even if the monthly payment is lower.
Early repayment charges can be expensive. Leaving a fixed-rate deal early can cost thousands of pounds. Always check the figures before switching.
Compare remortgage deals for home improvements
Our online platform lets you compare remortgage deals from lenders across the UK, with real-time rate information and no obligation. Once you have identified a deal that fits your situation, our team of specialists is on hand to offer tailored support. We take the time to understand your financial circumstances and long-term objectives, so you can choose the option that makes the most sense for you.
If you are unsure where to start or want guidance on whether to remortgage or take a further advance, do not hesitate to get in touch. We are here to simplify the process and help you secure a remortgage that aligns with your goals.
FAQs
Yes. Remortgaging to fund renovations is a straightforward and common use of the equity you have built up in your home. You apply to replace your current mortgage with a larger one, and the extra money released goes towards the building work. You will need enough equity in the property and will need to pass the lender’s affordability checks.
Yes, there are two ways to do this. You can remortgage with a new lender and take a larger overall loan, or you can apply for a further advance with your existing lender, which adds a separate, additional loan on top of your current mortgage. A further advance is often the simpler option if you are mid-way through a fixed-rate deal, as it avoids the early repayment charges that come with switching lenders.
It depends on the size of the project and your current mortgage situation. For larger projects (typically above £25,000), remortgaging or a further advance usually gives you access to lower interest rates than a personal loan. For smaller amounts, an unsecured personal loan may be cheaper once you factor in valuation and arrangement fees. For projects in between, comparing the total cost of each option, not just the monthly payment, is essential.
If you are within a fixed-rate deal, a further advance avoids early repayment charges and is often the more straightforward route. If your current deal is ending or your lender’s rate is uncompetitive, switching to a new lender through a full remortgage could save money over the long term. The right answer depends on your ERC figure, the interest rate differential, and the fees involved.
There is no fixed minimum, but most lenders will not allow you to borrow against more than 80-90% of your property’s value. In practice, you need enough equity to cover the extra borrowing while staying within that loan-to-value limit. If your renovation will increase your property’s value, this can improve your position. See our guide to releasing equity for more detail.
About the Author:
Matt is a top contributor at Speedy Remortgage and has worked in the financial services industry for over a decade now. Through his expertise on mortgage and remortgage has helped hundreds of customers to achieve their property goals.