Remortgage to Make Home Improvements
There are several beneficial reasons to remortgage. Homeowners apply for a remortgage to free up cash that has been built up into home equity. They also remortgage to save precious pounds each month through a lower monthly mortgage payment. But, since many homes are viewed as long term investments, homeowners are remortgaging to make home improvements. By remortgaging to make home improvements, a homeowner is committing to the idea that what they are doing is believed to increase the market value of the home, and ultimately, the selling price of that home.
Remortgaging is a financial tool every homeowner should at least consider after living in that home for a couple of years. There are several advantages to remortgaging that can affect the equity within a home. One of the most beneficial ways is to remortgage to make home improvements. Home improvements can be considered anything from changing the landscaping around the house to updating the fixtures in one of the bathrooms. In a normal economy home improvements typically increase the value of a home and therefore increase the equity within that home.
Equity in your home is defined as the difference between the value of your home and the amount you owe on the home. In a normal economy, a level of positive equity is typical for most homes. This is especially true if a homeowner has been residing in that home for a few years. Negative equity is an unfortunate situation which occurs when the amount you owe on the home is higher than the value of the home. This happens quite often in struggling economies. One of the ways out of a negative equity situation is through making home improvements.
Home improvements which can greatly improve the value of your home include improvements made to areas which are often frequented. This usually includes the kitchen, den, and areas outside the home like the deck or large patio. Home improvements made to these areas are considered improvements which enhance the quality of life within the home. The major benefit of those improvements, though seeming expensive, will be at the time of selling the home. A good rule of thumb is adding at least 20 to 30% to the cost of the improvement when calculating the new value of the home. Keep in mind, the value of the home is different than what you will actually be able to sell the home for. The value is usually higher than the actual selling price.
Remortgaging is a beneficial financial tool that not enough homeowners take advantage of. Most people think of a lower monthly mortgage when considering a remortgage. That is the beauty of a remortgage. Not only is it possible to save money each month based on interest rate levels. It is also possible to use the benefits of a remortgage to increase the equity within your home, and ultimately the selling price of your home. Take a look at remortgaging to make home improvements as soon as possible.