Are you thinking about moving house in London in order to get an extra bedroom for a growing family or just to get a more spacious property? While the thought of this may be exciting, it can be extremely difficult to find a London property with more space for a great price. However, another way of getting more space, and also increase the value of your current home, is to extend it with an extension or loft conversion.
Is it worth moving house in London for more space?
Moving house in London can be expensive business. The average two-bedroom property price in London is around £600,000 and for that price you may be lucky to find a property on the Zone 2-3 border.
In order to move up to a three-bedroom house in the same area, you would need to increase your mortgage to the tune of £150,000 to £200,000 as the average three-bedroom house in Zones 2-3 is £750,000-£800,000.
This doesn’t even take into consideration the large amount of stamp duty, solicitors’ fees, moving costs and potential increases in council tax that will come your way.
The thought of a new home may be alluring, but it might not be the most cost effective way of getting more space.
Why extending your London home may be the best option
According to a survey by Nationwide Building Society, you can increase the value of your property by as much as 22% by building a home extension or loft conversion.
With this in mind, the average two-bedroom property in London could increase its value by £132,000, which is an incredible potential profit for a future sale and a great way of increasing the space in your current home. With the demand for larger properties being that much higher in London, the addition of a loft conversion or extension can add a large amount of value to your home beyond the national average.
While increasing the value of your home is a great motivator, it’s not the only reason to do it. Maximising your space can improve your quality of life, help you move forward with growing your family, provide you with space to work from home, or even allow more friends and family to stay.
The average loft conversion or extension can cost anywhere between £20,000 to £45,000+, depending on the size of the project. So it’s clear to see that if your property is suitable it can be much more cost effective to increase the size of your current home rather than moving.
Of course, getting £20,000-£45,000 may not be that easy to come by, which is why many people consider remortgaging their home to get the capital.
Remortgaging your home
Remortgaging is where a homeowner takes out a new mortgage on a property that they already have a mortgage for. It can be a way to replace an existing mortgage for a product with better interest rates, or to borrow money against your property. Around a third of all home loans made in the UK are actually remortgages.
But before you call me to ask for help securing a new mortgage for your home extension, have you pursued other ways to raise the money? Remortgaging may be not be the cheapest way to get a loan; and because it is a loan secured on your home, it is not without risk. If other avenues of finance are not open to you then by all means give me a call!
Generally, the first step for remortgaging should be to speak to your existing lender to see whether they can increase your mortgage. You will need to go through the same application process as you would if you where applying for a mortgage from a new lender; so factors such as your credit score, current circumstances and the value of your home will be important. If your circumstances have changed, for example if you’ve taken a pay cut since taking out your current mortgage, you may find that your lender is not prepared to lend more, regardless of your history.
Therefore, before laying your cards on the table it may be a good idea to test the market first. You will need various bits of information to see whether you’re eligible for a mortgage that covers your home extension costs. These include:
- Your income and outgoings
- The current value of your home
- A quote for building works (with contingency)
- Estimate of the value of your property once the extension is complete
At this point you might want to talk to a mortgage adviser to explore your options and see whether your current lender is still the best mortgage provider for your needs.
If you are struggling to remortgage give me a call and we can explore your circumstances in more detail. Call 020 3355 4841 or email firstname.lastname@example.org