We welcome all credit grades and have various programs to help anyone get a home of their own. This service is offered to you at no charge and we do not check your credit. Click the button below and get matched with a lender now.Get Started!
Enhancing the features of a home is an effective way to add to its worth. Home development plans could include an extension for additional rooms, the conversion of a loft into a living space or adding a patio in the backyard. However, securing the right kind of mortgage for adding in the enhancements could be challenging.
Make Enquiries with the Original Lender
An obvious process to raise funds is to approach the lender of the existing loan for an advance. It is however, crucial to note that there could be an arrangement fee. This fee may be quite large, considering the fact that a home improvement loan is much smaller than the main mortgage. A standard variable rate is one of the best mortgage options as the accompanying fees are low. Some lenders do not impose arrangement fees for this mortgage. A low cost deal has an added shortcoming that the rates of repayments are high as compared with those of the original loan. Refinancing could be an option, if the borrower secures favourable interest rates.
Consider Flexible Loans
A flexible loan allows a significant amount of freedom to a borrower. The borrower may modify the terms according to his particular needs. There is considerable paperwork in the application process to provide evidence about income claims of the borrower. A flexible loan is particularly useful when the homeowner is not very sure of the amount needed for home improvement. This category of mortgage lets the individual borrow as much he needs. Additionally, there is no fine for not availing of the full amount. A drawback of this loan is that repayment procedures are very stringent and there are late fees for not making payments on schedule. The bank supplying the mortgage may freeze the loan, if the financial condition of the borrower worsens.
An offset mortgage links the loan with savings held in a bank account. In an offset mortgage, the interest is on the difference between the sum borrowed by the individual and the sum in his bank account. This procedure of calculating the interest reduces the monthly repayments, considerably. An offset mortgage is particularly beneficial, if the borrower has a significant sum in his bank account. A drawback of taking an offset loan is that the money in the account linked to the loan will not earn any interest for the period of the loan.