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Raising the roof – changing your mortgage to do more with your home

House prices are at record levels, but if you need an extra study room, a new kitchen or better insulation for a cold winter, you should not despair. Borrowing rates are also at record lows, and people with a house already may even be eligible to release more cash from their investment, get a cheaper deal, or use their mortgage to make sustainability improvements.

Joyce Wassenaar-Pepping, head of the aftersales department at Expat Mortgages, says that her team has helped hundreds of people do more with the house (and the investment) that they already have.

“It is quite challenging to buy another property at the moment, so many people are thinking about renovating their own house,” she says. “Most people are working from home, and looking at their property the whole day, and because of higher property values, a lot more is possible.”

If your house has risen in value, she points out, you may well be able to borrow more money against it, if your income can also support this. Your loan may be worth less as a proportion of the total value in turn, and this could also mean that you qualify for a better rate with your mortgage adviser and can save money here, or potentially borrow more.

A lot of people are investigating releasing money for renovation, typically €30,000 to €60,000 – but sometimes even up to €100,000. When a property owner intends to make improvements to the home’s sustainability – such as better insulation or windows – this means that more money (up to 106% of the value) can be lent against the asset.

In certain circumstances, a loan increase against your house can also be taken out for another investment purpose, such as a second home, or a car – again, benefiting from mortgage rates that are typically lower than for personal loans.

Some home owners also want to borrow the money to pay off the leasehold, something which should improve a property’s value and make it more sellable in the future. Others might be interested in renting out their first property and buying a new home.

The first step in the process is to contact a mortgage broker like Expat Mortgages, who will make an initial assessment to see if people meet the Loan to Income (LTI) criteria.

“The next step is to get an appraiser to value your house, and we can also help with this,” says Wassenaar-Pepping. “For an appraisal, you typically pay €700 or €800, which can be a tax deductible expense.”

If you want to renovate, you will need quotes from contractors estimating the cost of the work (and the appraiser can also look at the potential value of the house when the works have been carried out).

Then, a mortgage adviser such as Expat Mortgages can help you broker a new deal with your current mortgage provider or work out whether it is worth breaking any potential penalty clause and remortgaging on another deal or with another provider.

“Typically, the whole process takes around three to five weeks,” adds Wassenaar-Pepping.

For people just wanting to check they are on the best deal at the moment, it’s worth doing a regular check. People with mortgages taken a few years ago might be paying 2% or 3% interest, when there are much better rates available now.

With certain mortgage providers, you can also request a “rente middeling” which finds an average interest rate between your rate and its current offer, sometimes for a very small administrative fee.

“Sometimes, including the penalty and the additional costs, you wouldn’t earn back what you paid to cancel a fixed rate and start another deal, so this may not always be beneficial,” she adds. “We consult with our clients and work out what is best for them.”

On the other hand, looking ahead, nobody knows where interest rates will be in several years, so it might still be worth your while to take a risk and fix for the next decade, paying a penalty now.

Another thing to bear in mind: with very few houses on the market for sale, and local councils pumping in money to solve housing shortages it is boom time for building. So if you’re planning a big build, get quotes in the diary and book contractors well in advance…while you are sorting out the financing.

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