Home Improvement Loans Are Costing Britons Millions
With house prices almost out of control and rising interest rates, most Britons are no longer contemplating the idea of moving to a bigger home. Indeed, over 40 percent would now consider the option of extending their existing property over moving to a new home. However, because UK banks charge higher interest rates on home improvement loans than they traditionally do for home mortgage loans, the decision to not to move and to build an extension to their existing homes could be costing Britons over £2,000 in additional interest and charges.
Although it may not feel like the right time to think about moving to a bigger home, careful consideration should be given before deciding whether or not to building an extension to your existing home. Not only will you likely face higher interest rates on your home improvement loan than you could otherwise expect to pay on a larger home mortgage loan, but you may also find that you incur additional fees and charges with a home improvement that you may not have foreseen.
For example, it could well be the case that you will need to get local planning permission approval before you undertake any extension to your existing building and doing this may require you to have architect plans. In addition, before granting you a home improvement loan the UK lender may require that a valuation be done to ensure that the value of the property will indeed increase as a result of the proposed home improvements.
One alternative that eager UK homeowners may want to consider if they do not wish to move and would like to have some cash to make home improvements, such as an extension, to their existing home is to re-mortgage the home with a new UK home mortgage provider, rather than necessarily taking out a home improvement loan with your existing UK mortgage provider. This could also have several additional benefits, such as locking in your home mortgage rate to a promotional rate.
Nevertheless, even here you would need to consider carefully whether or not you may need to pay breakage fees for early repayment of your existing mortgage and valuation fees for you re-mortgage before deciding whether or not this is the better option available to you and simply moving to a nicer, bigger and newer home.
One thing that does seem certain, at least for the foreseeable future, is that in these times of both rising house prices and rising interest rates, homeowners in the UK are going to need to be giving even more careful consideration than normal to all the different options available to them if they want to make sure they’re not losing millions of pounds in additional costs and fees to UK banks.
Richard Smith
17th August 2006
