Natwest recently surveyed
562 UK homeowners to find out whether they had remortgaged within the last 24 months. They wanted to know what their experience had been since making the decision, as well as what impact it had on their property.
What did they find?
Of those that remortgaged, Natwest found that 62% had seen an increase in the value of their property. Additionally, 55% of those who remortgaged saw their home increase by up to 20% of its value, with 30% seeing somewhere between a 10% and 20% increase.
Many people made the decision to remortgage their home due to the increase in house prices during the Coronavirus pandemic. Prices have been rising at an incredible rate, in part due to the Chancellor’s Stamp Duty holiday
The demographic who have the most presence in this report are 18-30 year old homeowners. 22% of homeowners in this age bracket have chosen to remortgage, as opposed to just 7% of 46-60 year old homeowners for example. As such, 45% of 18-30 year old’s homes are now worth between 10% and 20% more.
How does the value increase?
Though it may seem it from this data, remortgaging your home is not enough on its own to increase your houses value. It’s what you do next that counts.
When you remortage your home, your mortgage lender will lend you a new sum of money which then gets added on the amount you owe, but you will continue to pay back at the same rate (or you might negotiate a new rate). This is why remortgaging is often used when people are struggling financially, as a way of getting access to the equity in their homes. But you can remortgage at any time.
19% of those surveyed said that they had remortgaged their property in order to use the extra money to fund renovations to their home. Most chose to renovate bedrooms, bathrooms and gardens. These improvements helped to make their home more appealing and helped to further increase its value.
33% had said that, though they did not remortgage with the express intention to renovate, it had given them the ability to make improvements on their home which then helped to increase its value.
As well as renovating, 19% used the money to make their homes more sustainable and energy efficient. This increased the value of the home as it is a trait that makes properties more attractive to modern buyers (and often keeps bills lower). It is worth noting that in addition to the Stamp Duty Holiday, the ‘Green Homes Grant’ also came into effect this year, in which you can apply for money to make your home more eco-friendly in just this way.
Is remortgaging now a good idea?
Natwest’s research shows that people choosing to remortgage now, are being savvy in putting that money towards improving the property and are already seeing the positive results. Property values depend on a variety of factors, including changes in the market and supply and demand, but rennovations that add extra features to a property can push up its value and even make it more appealing to a different target market.
For example, adding an extra bedroom in an area that is mainly populated by two bedroom properties, or adding a garden office to provide an extra selling point to work from home buyers, are improvements that take into account your area and your potential buyer’s needs.
With the market flooded with buyers eager to save on their Stamp Duty, and mortgages limited for those with low deposits, those remortaging could find a great deal at the moment, whether they plan to eventually sell their home or not.