Extensions are an excellent way to increase your home's square footage and boost its value. However, whether you're adding a conservatory or building a new bedroom, extensions come with a lot of upfront expenses.
You might want to consider one of the following financing options to carry out your project as stress-free and debt-free as possible. Remortgage your property
One option for financing your extension is to remortgage your home. Remortgaging involves transferring your mortgage from one provider to another to raise funds. This usually means you commit to a longer repayment plan in return for a lump sum loan. Many people are keen to go down this route as it's a quick way to get some money upfront. It can also be a way to consolidate your debt
into one monthly payment.
If you decide to remortgage your property to cover the costs of an extension, it's important to be fully confident that you can make your monthly mortgage payments. With remortgaging, you increase the amount you owe. If you default on your repayments, you run the risk of repossession. It's a big decision so always weigh up your options before choosing to remortgage.Consider a second mortgage
A second mortgage is different from remortgaging. Also referred to as a secured loan, a second mortgage gives you the opportunity to borrow from a second lender. Your original mortgage remains the same, but you have another alongside it. Taking out a second mortgage gives you more money upfront, but it does mean you have to make two sets of repayments. Your second mortgage may also have a higher interest rate than your first. Use your savings
If you've managed to put aside money for a rainy day, you could use this to pay for your extension. The benefit of using your savings is that you don't need to worry about repayments. However, you may also want to consider how long it will take you to save the money back up again and whether an extension is the best use for those finances. Take out a personal loan
If you are unable to save the amount of money or your property is not eligible for remortgaging, you could take out an unsecured loan. Unlike secured loans (including mortgages), unsecured loans are not tied to an asset. Unsecured personal loans are often more accessible than remortgaging your house or getting a second mortgage.
When comparing loans, it's best to look at the annual percentage rate (APR)
. This will give you a more accurate picture of what you'll need to repay than focusing on interest rates alone. Many lenders will let you borrow up to £50,000. Taking out an unsecured loan also tends to be a quick process and you won't need to put your property at risk. As with all personal loans, always make sure you can make the monthly repayments.