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Understanding How to Remortgage.
To remortgage means switching an existing mortgage to a new lender or product. Not only can this secure a better interest rate, but it can release equity from an investment property. Additional borrowing involves borrowing extra funds with the current lender against the property’s equity. ‘Both options are good for home improvements’ says Stuart Marshall of Liquid Expat Mortgages. ‘However, the outcome of a remortgage application will depend on the borrower’s equity in the property, their credit history, and their income stability.’
Lenders’ Perspectives on Remortgaging and Additional Borrowing.
Mortgage lenders consider several factors when reviewing remortgage or additional borrowing applications for home improvements. This is even more crucial for UK expats and foreign nationals. There are a few things that will help a borrower’s chances of securing a remortgage or additional finance:
- Equity in the Property – More equity increases the borrower’s chances of getting additional funds. Lenders usually prefer the loan-to-value (LTV) ratio not to exceed 85%.
- Credit History – A strong credit history enhances approval chances. Lenders need to trust that a borrower can manage more debt responsibly.
- Income Stability – Stable income reassures lenders of a borrower’s ability to meet higher repayment obligations. Expats may need to provide evidence of overseas income.
- Purpose of Borrowing – A clear plan for home improvements that enhances property value positively influences lender decisions.
Industry Trends for Remortgaging.
Recent data shows a growing trend among UK expats and foreign nationals using property equity for home improvements. A 2023 survey by the UK Finance Association reported a 15% increase in remortgaging applications for home renovations compared to the previous year. This trend underscores the confidence in property investments and the desire to improve living standards. The Royal Institute of Chartered Surveyors (RICS) highlighted that home improvements, especially eco-friendly upgrades, significantly boost property value. Post-renovation, property values can increase by 10-15%, making remortgaging and additional borrowing attractive options.
Making Informed Decisions When Remortgaging.
For UK expats and foreign nationals, considering a remortgage allows them to upgrade their homes or refurbish their investment properties. It’s important to understand some of the issues when remortgaging as an expat or foreign national. ‘To secure the best terms, understanding lender criteria and industry trends is crucial’ says Stuart Marshall. ‘With the right approach and expert advice, it is easier to unlock the property’s potential than approaching a lender ill-prepared. A specialist expat broker can offer personalised advice specific to the borrower’s circumstances and financial objectives. This can allow them to explore remortgage options with lenders who understand the expat market. On the contrary, some traditional high street lenders have no experience in dealing with UK Expats or Foreign Nationals.’
Case Study: The Cotterill Family’s Home Renovation and Remortgage Plan.
The Cotterill family had been living in Dubai for 14 years and planned to return to the UK. They wanted to upgrade their family home, which until then had been rented out under a Consent to Let agreement, and over the years had appreciated considerably in value. Their refurbishment plans included:
- Kitchen Upgrade – Creating an open-plan space for a contemporary living area.
- Bathroom Renovations – Updating two bathrooms for improved functionality.
- Rear Extension – Adding an extension to enhance indoor-outdoor living.
They estimated approximately £225,000 for these renovations to be carried out and planned to remortgage using their property’s equity. Here are the details of their property valuation and remortgage:
- Current Property Value: £625,000
- Current Mortgage: £83,000
- Desired LTV Ratio: 55%
- Total Mortgage Amount Needed: 55% of £625,000 = £343,750
- Funds Required for Renovation: £225,000
By remortgaging at a 55% LTV ratio, the mortgage was £343,750. Once the existing mortgage of £83,000 was paid off, there was a balance of £260,750 available. This allowed our client £225,000 for renovations with an additional £35,750 for unforeseen expenses or fittings. In this case, remortgaging for home improvements helped them achieve their dream home. With the expert advice and full support of the Liquid Expat Mortgages team, the Cotterill family ensured that the process ran smoothly, and they were able to access the right lenders for their needs. The Cotterill’s achieved their financial objectives so that they were able to start work on their property immediately and minimise their disruption upon moving back to the UK.
Liquid Expat Mortgages
Suite 4b, Link 665 Business Centre,
Todd Hall Rd,
Haslingden, Rossendale
BB4 5HU
Phone: 0161 871 1216
www.liquidexpatmortgages.com
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