TL;DR: If your home needs work but your savings won’t stretch far enough, borrowing against your mortgage is often the most cost-effective route.
Homeowners with enough equity can remortgage, take a further advance, or use a second charge mortgage to fund projects large and small. Each option works differently, and the right one depends on your existing mortgage deal, how much you need, and your current financial position.
Speaking to an independent mortgage broker is the best way to work out which route suits you.
You’ve had the idea for a while.
Maybe it’s a kitchen extension, a loft conversion, or a bathroom that the house desperately needs. The plans are in your head, the builders have given you a quote, and now comes the harder question: how do you actually pay for it?
For many homeowners, savings alone won’t cover the full cost of significant building work. A loft conversion can cost anywhere between £20,000 and £60,000 or more, and a house extension will typically run higher. According to the 2025 UK Houzz & Home Study of over 1,000 homeowners, the median renovation spend in 2024 was £21,440 – a 26% increase on the previous year.
If you don’t have that sitting in an account then you’ll need to borrow it from somewhere.
More than half of UK homeowners (51%) carried out renovation work in 2024, according to Houzz, so if you’re thinking about home improvements, you’re far from alone. Homeowners are generally in a better position to fund that work than most people think.
If you’ve built up equity in your property, you can often access it at mortgage rates, which are considerably lower than personal loan or credit card rates. This guide explains the main ways to do it, what lenders look at, and how to decide which option makes sense for your situation.
Why Do Homeowners Use Their Mortgage to Fund Home Improvements?
Personal loans and credit cards are fine for smaller jobs, but they become expensive quickly when you’re borrowing larger sums.
A personal loan for £25,000 at a typical rate over five years can cost significantly more in interest than borrowing the same amount against your home at a mortgage rate.
Borrowing against your property is a decision that deserves proper thought, your home is the security for the loan.
For homeowners who’ve built up equity and have a steady income, though, using the value tied up in their property to fund worthwhile improvements is a well-established and sensible approach.
What Is Home Equity and How Does It Affect Borrowing?
Equity is the difference between what your home is worth and what you still owe on your mortgage.
If your home is valued at £550,000 and you have £300,000 left on your mortgage, your equity is £250,000.
When you borrow against your home for improvements, you’re drawing on some of that equity. Lenders will want a reasonable amount to remain after any new borrowing, and most will want the total debt to stay within a certain percentage of your home’s value.
This is known as the loan-to-value ratio, or LTV.
What Are the Main Ways to Borrow for Home Improvements?
There are three main mortgage-based routes homeowners use to fund building work. Each has its own mechanics and suits different situations.
How Does Remortgaging Work for Home Improvements?
A remortgage means switching your mortgage to a new lender, or renegotiating with your existing one, and borrowing more than you currently owe.
The difference between the new loan and your outstanding balance is released to you as cash, which you can then use to fund your home improvements.
For example, if you have £350,000 remaining on your mortgage and want £50,000 for an extension, you’d remortgage for £400,000. After the new lender pays off your existing mortgage, you’d receive the £50,000.
Remortgaging works well when your current deal is coming to an end, or when the rates available on the open market are competitive enough to justify a switch. If you’re locked into a fixed-rate deal and remortgage early, your lender will likely charge an early repayment charge (ERC), which can be expensive.
Always check what you’d owe before starting the process.
One advantage of remortgaging the full amount through one lender is simplicity. You end up with a single mortgage and a single monthly payment. The trade-off is that you’re paying interest on the additional borrowing over the full mortgage term, which adds to the overall cost.
What Is a Further Advance and How Does It Work?
A further advance is when you borrow additional money from your existing mortgage lender, on top of your current mortgage.
Think of it as a top-up.
You stay with the same lender but take out a second facility, at a different interest rate to your main mortgage.
This option is worth considering if you’re mid-way through a fixed-rate deal, because you avoid any early repayment charges on your existing mortgage. The further advance sits alongside your main mortgage, and you’ll make two separate monthly payments.
The process is faster than a full remortgage since solicitors are rarely involved. Your lender will reassess your affordability and run the usual checks, but there’s no need to move everything to a new lender.
The downside is that you’re limited to what your current lender will offer, and their rates on further advances may not be the most competitive on the market.
What Is a Second Charge Mortgage?
A second charge mortgage is a separate loan secured against your property, taken out alongside your existing mortgage.
It sits behind your main mortgage in priority order, which means if you were ever to default and your property was sold, the first charge lender gets paid before the second charge lender.
Because of this additional risk to the new lender, second charge mortgages usually carry higher rates than first charge remortgages.
They can be a sensible option, though, if you’re in the middle of a competitive fixed-rate deal and don’t want to trigger early repayment charges by remortgaging. You leave your main mortgage completely untouched and borrow separately.
Second charge mortgages secured against a residential property you live in are regulated by the Financial Conduct Authority (FCA), which means you have certain consumer protections in place. Loan terms can run from a few years up to 25 years or more, and you can borrow significant sums depending on your equity and income.
What Do Lenders Check When You Apply to Borrow More?
Whether you’re remortgaging, asking for a further advance, or applying for a second charge mortgage, lenders will run a similar set of checks. Knowing what they’re looking at helps you prepare and avoids surprises further down the line.
How Do Lenders Assess Affordability?
Lenders need to be satisfied that you can comfortably meet the higher repayments once your borrowing increases. They’ll look at your income, your regular outgoings, and any existing debts. If the new monthly payment would leave your finances stretched too thin, the lender will decline or reduce the amount asked for.
Some lenders apply a stress test, checking whether you could still afford the repayments if interest rates were to rise. This is worth bearing in mind if you’re looking at a variable rate product.
How Much Equity Do You Need?
Lenders won’t allow you to borrow all the equity from your home.
Most mainstream lenders will want you to retain at least 15 to 20 per cent equity after any new borrowing, which limits you to an LTV of around 80 to 85 per cent. Some lenders will go higher, though products above 85% LTV are less common and usually more expensive. Some specialist lenders will go higher, but those products are less common and often more expensive.
The more equity you have, the more favourable the rates you’re likely to be offered. Borrowing at 60 per cent LTV, for example, will usually attract a lower rate than borrowing at 80 per cent.
Does Your Credit History Affect Your Application?
Your credit file will be reviewed as part of any application.
Lenders are looking for evidence that you manage debt responsibly. Missed payments, County Court Judgements (CCJs), or defaults don’t automatically rule you out, but they do affect which lenders will consider you and on what terms.
It’s worth checking your credit report before you apply, so there are no surprises. Any errors should be disputed and corrected before you approach a lender.
Do You Need to Explain What the Money Is For?
Lenders will ask what the additional funds are for.
Home improvements are a widely accepted purpose, and lenders tend to view it positively since the work may increase the value of the property, improving their security. You may be asked to provide quotes from contractors or details of the planned work.
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Does Improving Your Home Add Value?
There are two distinct reasons for carrying out home improvements: doing work because you want to enjoy a better home, and doing work to increase your property’s value before a sale.
Both are valid, but they can lead to different conclusions about whether borrowing makes financial sense.
Not all improvements deliver a return in added value. A new kitchen might add a meaningful amount to your home’s sale price in some markets but barely cover its cost in others.
Extensions and loft conversions are generally considered among the most reliable ways to increase a property’s value, partly because they add usable floor space. According to Squared Money’s 2024–2025 Home Improvement Index, an extension can add £20,000–£30,000 to a property’s value, while loft and garage conversions typically offer some of the highest returns on investment for UK homeowners.
If your main motivation is to enjoy your home more, the financial calculation is different. You’re not trying to profit from the work; you’re choosing to borrow now so you can have a better living environment for years to come.
That’s a perfectly reasonable decision, provided the repayments are affordable and fit within your wider financial plans.
Before committing, it’s worth getting a rough view from a local estate agent on how much value the planned work might add. It won’t give you a precise figure, but it can help you think about whether the investment makes sense given what you owe.
Should You Improve Your Home or Move House?
Many homeowners reach a point where they outgrow their space and start weighing up whether to extend or sell.
Moving is often the more expensive option. According to HomeOwners Alliance, the average cost of buying and selling a home in the UK in 2026 is around £13,018, and that figure rises significantly for higher-value properties.
In London, the cost of a home move averages £32,786. Once you factor in the cost of a larger property on top of those transaction fees, many homeowners find that improving makes better financial sense.
Here are five reasons why improving is worth considering:
- You could add meaningful value to your existing property.
- You create more space without leaving the area you already know.
- You avoid the significant costs and stress of buying and selling.
- Your children stay near their school and their friends.
- You get the home you actually want, designed around how you live.
What Are the Best Ways to Fund Smaller Home Improvements?
Not every home improvement needs an increase to your mortgage.
For smaller projects, a personal loan or even a 0% purchase credit card can be a more straightforward option, with less paperwork and no risk to your property as security.
Personal loans for home improvements are available up to around £25,000 from many mainstream lenders, with some going higher. They’re unsecured, which means your home isn’t at risk if you get into financial difficulty, but they do carry higher interest rates than secured borrowing.
For a modest project that you can comfortably repay within a few years, an unsecured loan can be cost-effective.
The right choice depends on the size of the job, your existing mortgage situation, and how quickly you can repay. An independent mortgage broker can help you think through the options before you commit.
How Can a Mortgage Broker Help With Borrowing for Home Improvements?
The range of options available for funding home improvements is broader than many homeowners realise, and the best route depends entirely on your individual circumstances.
What works well for one person, a remortgage to a new lender at a lower rate, might be expensive for another who’s locked into a fixed deal with a significant early repayment charge.
A whole-of-market mortgage broker can look across all three main routes, compare rates from lenders you may not have direct access to, and advise you on the option that makes the most sense for your situation.
They can also check your eligibility before any formal application goes in, which helps protect your credit file.
Respect Mortgages is not a mortgage broker and is not authorised by the FCA to arrange mortgages. What we do is connect you with a trusted, independent, whole-of-market mortgage broker who can give you the expert advice you need.
Frequently Asked Questions
Yes, in most cases you can. The most common ways to do this are a remortgage to release equity, a further advance from your existing lender, or a second charge mortgage. Each route has different costs and conditions. You’ll need enough equity in your property and the income to support higher repayments.
Most lenders will want you to retain at least 15 to 20 per cent equity after any additional borrowing. If your home is worth £500,000 and you owe £350,000, you have around 30 per cent equity, which gives you room to borrow more. The exact amount available depends on your income, credit profile, and the lender’s maximum LTV.
A further advance is additional borrowing from your existing mortgage lender, on top of what you already owe. It sits alongside your main mortgage, often at a different interest rate, and is repaid separately. It can be a good option if you’re mid-way through a fixed-rate deal and want to avoid early repayment charges.
A second charge mortgage is a separate loan secured against your property, alongside your existing mortgage. It’s worth considering when you have a competitive mortgage deal you don’t want to disturb. You borrow independently from your main mortgage, keep your existing rate, and repay the second charge separately. Rates are generally higher than first charge lending, but it avoids early repayment charges on your main deal.
Yes, if you borrow more when you remortgage, your monthly payments will increase to reflect the larger loan. How much they rise depends on the new rate and term. If you remortgage to a lower rate than you’re currently on, your payments may not rise significantly even with the extra borrowing, but this isn’t guaranteed.
It’s more difficult, but not impossible. Some specialist lenders are more flexible about credit history than mainstream banks. You’re likely to face higher interest rates and stricter conditions. Speaking to a whole-of-market mortgage broker is the best way to understand your options without damaging your credit file by making multiple applications.
Learn more: Can you remortgage with bad credit?
A full remortgage to a new lender typically takes four to eight weeks from application to completion, though it can take longer if there are complications. A further advance from your existing lender is often faster, sometimes completing in two to four weeks. A second charge mortgage can also be arranged relatively quickly, depending on the lender.
For a full remortgage, a solicitor or conveyancer is usually involved. For a further advance with your existing lender, legal work is often not required, which is one reason it can be faster and cheaper to arrange. For a second charge mortgage, some legal work is needed. Your mortgage broker will explain what’s involved for whichever option you choose.
In many cases, yes. Moving home in England costs an average of around £13,000 in transaction costs alone, according to HomeOwners Alliance, and that figure rises sharply for higher-value properties. A well-planned extension or loft conversion may add usable space and increase your property’s value at a lower overall cost than selling, paying stamp duty, and buying something larger. Whether it stacks up financially depends on your property, location, and the type of work planned.
