If you are looking to free up cash locked in your property remortgaging your home can be a great way to achieve this. Most people remortgage so that they can have extra capital to invest in their homes, take a holiday of a lifetime or start a business. Here we examine the best uses for that capital that is waiting in your home to be used.
Home Improvements: Most homeowners would make improvements to their homes if they had the time and money, but many lack the capital to invest in new kitchens, bathrooms and conservatories. It is an excellent way of adding value to a property and of investing in an asset that is going to appreciate in value, especially when other investments seem too risky.
If you are in a different job or earning more money by other means, you may want to change the type of mortgage product that you are on to fit your new circumstances too. Offset mortgages are very popular with those who earn high amounts of commission every month, for example.
Replacing windows will always add value to a property so it is another great home improvement. It often helps to reduce outgoings on bills by making the house cost less heat. Another way of utilising spare capital is by having a conversion or an extension, both of these can add value to the property, but again, be sure about the ceiling price for the property before you spend tens of thousands.
Home improvements vary widely, from re-decorating and re-carpeting, to converting the loft or attic into a new room. Of course, you should be careful not to overspend, as you may end up spending more money than it’s worth, as the value added to your home may not be as high.
Another popular home improvement is adding an extension to the home, either as a conservatory or as additional brick rooms. This can allow for a larger kitchen or adding new bedrooms on which can dramatically increase the value of your home.
Debt Consolidation: Another common reason for remortgaging is to raise cash in order to consolidate other debts. For example, if you have credit cards or personal loans it can be beneficial to reduce your interest and your monthly outgoings by consolidating them into your mortgage. Bear in mind that whilst your monthly repayments may reduce you may pay more interest in total as the borrowing is taken over a longer term.
The flipside to this, is the fact that in the short term your monthly bills will be reduced. If you have a store or credit cards with an APR of 20% for example, the rate can be cut to 5% or 6% by consolidating it onto the mortgage. This will take a huge burden from your shoulders financially, especially if you have numerous debts like this.
A financial adviser may be able to help you with regards to working out just how much more you would repay over the term of the mortgage.
Buying Additional Property: Many people dream of owning a second home or a holiday home, and taking additional funds with a remortgage can help you to make your dreams of owning another property a reality. You can use the funds as a deposit on a second mortgage, or if you have enough equity in your property and the purchase cost is low enough you may be able to pay it all in one go.
James writes for Just Remortgages one of the UK’s top sites for the latest remortgage rates and remortgage deals
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