How a Remortgage Can Help You Acquire Your Dream Kitchen

The kitchen is the perfect place to start if you want to add value to your home. Indeed, property guru and TV personality Phil Spencer told a national newspaper in 2010 that the kitchen should always be your choice if you are only going to improve one of the rooms in your home.



So in what practical ways can a new kitchen add value to a family home? A new kitchen can give you and your loved ones some extra living space by better managing your storage and making better use of the floor space available. An added benefit of this is the fact that the kitchen is one of the most popular rooms with potential homebuyers. This means that a new kitchen is the one investment most likely to make your property more appealing to prospective buyers.



The only problem that many people face is that the exercise of having a new kitchen put in can be costly. The cost is usually thousands, and in this tough economic climate it is often difficult to find the funding to engage in such a large project.



Few people have the cash to fund a new kitchen and so finding the money needed to undertake the work may be your first step. Whilst many people consider loans or credit cards to fund the work, a remortgage is one of the most straightforward and cost effective ways to pay for your dream kitchen.



When you remortgage you switch your home loan from one provider to another. Your existing mortgage is repaid and you take out a brand new mortgage with a different bank or building society. And, as part of this switching process, you can normally apply to increase the size of your mortgage to cover the cost of the home improvements you wish to undertake.



So that you can to borrow extra capital in the form of a remortgage, you typically have to have some equity in your home, otherwise you begin to add to you overall burden of debt in an unsustainable way. Remortgages tend to be offered for approximately 90 per cent of the value of your property; although borrowers tend to benefit from lower interest rates if they borrow less than 75 to 80 per cent of their property's value. Over 90 per cent and banks anticipate greater risk and therefore charge higher rates of interest.



You are also likely to have to demonstrate that the remortgage is affordable to you. A lender may require payslips or company accounts as well as details of other outgoings. Sometimes a lender will be more likely to agree your remortgage if you can demonstrate that the new loan saves you money and that you have been maintaining higher mortgage payments in the past.



When you remortgage, the new lender will typically allow you to borrow the total amount (mortgage plus additional loan) on the same interest rate. This means that you may be able to fix the repayments on the whole remortgage, or take the whole loan on a discounted deal. Many lenders will also help with the costs of remortgaging by paying for a survey and the legal fees involved in switching lender.



It is important to remember however, that when you are remortgaging your home to update the kitchen that you should not overspend on the project and to ensure that the refurbishment is adding enough value to the property for it to be worthwhile. For example, there it would not be sensible to pay for a £30,000 kitchen on a house that is worth £100,000.



With the kitchen being one of the most important aspects of a property, it is important that you get it right, so make sure that you spend time researching before jumping straight in, otherwise it could be an expensive mistake.





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Timothy Frodsham writes for JustRemortgages.com one of the UK's top sites for the latest remortgage rates and best remortgage deals.