To Move or Improve?

Dilemma! Do you stay in your current home and improve or up sticks, sell and move to a new home. When you are looking to add value to your home is it better to try and do that where you are or look elsewhere? 

This might be a question that you are asking yourself, if so it is important to understand some of your mortgage options.

STICK:

Kitchen Extension, Loft Conversion, Double Height Side Extension?

Its very tidy if coming towards the end of your current fixed rate to think about borrowing additional funds for home improvements. Renegotiating the terms of your mortgage and tying in the home improvement loan means that all of your borrowing is on one rate with one end date, which is convenient.

However, you can usually get a further advance from your existing lender at any time for home improvements. This is subject to status at the time of request but if you qualify you can usually borrow up to 85% or even 90% of the value of your home as it is now before the works are done. Your lender might ask for quotes for the work and they are likely to send a valuer round to your property to get an up to date valuation.  

You may want to borrow against the ‘When Improved’ valuation of the property, i.e. what the property will be worth when you have finished the works.  This can be done but you would need to have finished the project, have the relevant planning permissions and building regulation approval in place. You can then apply for a further advance on the new and improved valuation. You would need a very understanding builder for this but they will definitely want paying on time so you would likely need to finance the costs temporarily elsewhere.

Reviewing your options here should also include a review of your budget and personal circumstances to ensure that the further advance is suitable.

Pros – You save stamp duty, estate agency fees and solicitors fees and you don’t have to move house. You keep your neighbours.

Cons – You might be limited in scope as to what you can do. You keep your neighbours.

TWIST:

Moving home offers a blank canvas for you, an opportunity to wipe the slate clean and take the equity that you have in your current home to buy somewhere larger, more space needing no work or a better opportunity to add value by doing work.

From a mortgage perspective it is worth knowing that even as a house mover you can get a 95% mortgage. So if you want to keep money back when you sell up and move, so you can spend to add value then you can keep some of your equity back to minimise the deposit down to 5% - subject to your circumstances.

In a more balanced property market it can be a good time to move up the housing chain, you may need to take a lower offer on your own home but this may translate to a greater saving on the next house you buy if you can negotiation a lower price on that.

Additionally if you find a house that you want to buy you may have time to find a buyer for yours before it is snapped up elsewhere. When the market is hot this is not usually possible.

Pros – You are likely to achieve more space and more opportunity to add higher value, it can transform your lifestyle at home. Less stressful now the market is calmer

Cons – Moving is expensive and can be stressful. Usually a larger mortgage payment when you move up the ladder.

Whichever way you go having the right professionals in place is vital, be it architects, builders and a great mortgage broker to guide you through your options.

If you still cant decide then there is always Kirstie & Phil !

YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOAN SECURED UPON IT.