Springtime home improvements boom will double remortgage applications

It says high house prices are forcing homeowners to stay in their current properties and re-mortgage for home improvements instead.

Data from Amity Direct’s four processing centres throughout Britain show that 53 per cent of the mortgage applications they process are equity release re-mortgages intended for extensions, improvements, maintenance or other major purchases. One in ten homeowners currently finance improvements through re-mortgaging or a secured loan (Source – HBOS). According to statistics issued recently by the Council of Mortgage Lenders, 50 per cent of all activity in Britain’s £270 billion-a-year mortgage industry now relates to re-mortgaging.

The home improvement season starts at this time of year, and on previous experience Amity Direct is expecting that re-mortgage enquiries will double in the next three months.

“Recently there has been a distinct shift in activity away from using mortgages to purchase property” says Amity Direct Operations Manager Julie Hamilton. “As a packager, it is important to us to know what the loan will be used for, so that we can tailor it in the best interests of our introducers. We have found that continuing high property prices are encouraging homeowners to hold on to their properties, and re-mortgage to increase the value of their homes through improvements.”

The increase in price from a three-bed semi-detached house to a four-bed detached villa can be as high as £200,000. But the average Amity Direct loan for home improvements is £20,000 for homeowners who want to build an extra room into their existing home.

Julie Hamilton added: “Building an extension is often a more affordable option than buying a bigger property. But borrowers should beware – while practical developments like a conservatory, loft, or installing central heating will add to the value of a property, cosmetic improvements like landscaping the garden will not.”