Spring is in the air. And it is not just the birds and bunnies which are nest-building. As buds burst open on trees, we are not just spring-cleaning our homes. We are making more than £75 billion worth of home improvements designed to improve our surroundings and add value to our properties.
Passion for paint
A staggering 9 million households (53% of all UK homeowning households) are planning to do DIY or home improvements in the next couple of months, according to new research from The MarketPlace at Bradford & Bingley.
In a craze which owes much to TV home makeover shows, our passion for paint is reaching new heights. As mortgage interest rates begin to rise again, the temptation is to stay put and re-decorate. A survey by Sainsbury's Bank shows that painting and decorating is the top choice with more than 6 million of us perfecting our brush strokes this spring. Other estate-agent favourites such as new bathrooms and kitchens, extensions, conservatories and double-glazing are also popular.
Home a-loan
Of course, turning your pad into a palace does not come cheap, even if you do all the work yourself. According to research from the Halifax, most people dip into their savings to pay for home improvements. But borrowing money is also popular, with home improvements given as the number one reason for loan applications, say Marks and Spencer Financial Services. The average amount requested is £3,605 but for larger sums, it could be cheaper to re-mortgage. So which route is right for you?
'This depends on a number of factors, perhaps most importantly how much the improvements are going to cost,' explains Elliot Nathan of The MarketPlace, Bradford & Bingley. 'If you're planning extensive changes, which have a good chance of adding value to your home, and need to borrow upwards of £10,000 then remortgaging may be well worth considering. If you only need to borrow a couple of thousand pounds, however, then a personal loan may be more suitable.'
With the best loan rates at about 6% taking out a personal loan may be a worthwhile option for smaller sums, particularly if you've got redemption penalties on your current mortgage deal and/or you want the money quickly. The money borrowed would also be typically paid back after 2 or 3 years. By remortgaging, borrowers will almost always get a better rate of interest. In addition to this, you can spread their repayments over a longer period of time, consolidate borrowing into one place and only need to carry out administration once. With interest rates still at very low levels there are some fantastic remortgage deals available at the moment, potentially making doing up your home both an affordable proposition and a shrewd investment plan. Remortgaging, though, may not be the solution for everyone. Borrowers need to weigh up the options carefully and we would always recommend they take independent financial advice before committing to a deal.
Changing rooms
So how can you be sure that the money you spend on your home will increase its value? The short answer is that there are no guarantees.
Surveyors believe that trend-driven projects such as swimming pools may not be the answer to adding value. Alternatively, start by making sure that any problems are fixed and that overall facilities such as plumbing, wiring and central heating are in tip-top shape. Money spent on insulation and security will be an investment. And new bathrooms and kitchens are always worthwhile. A good kitchen is a winner, says Peter Bray of Bradford & Bingley. 'A good quality kitchen costing £5,000-£6,000 should pay for itself, boosting the property's value by as much as 10%' he says.
Before you crack open the paint, make sure you have a plan. Patrick Sawdon, chief valuer at Halifax, offers this advice: 'It is important to remember the resaleability factor when considering any work to be undertaken on your home. The key is to ensure that any alterations are in sympathy with the surroundings. Don't go overboard. If you carry out a £25,000 kitchen improvement on a £100,000 house, then you are not going to get your money back.'
'Done properly, home improvements can add real value to a property, adds Elliot Nathan. 'We would always advise people seek out expert advice to ensure they are getting as good a deal as possible and are spending their money wisely. Shoddy work or work done on the cheap may have the opposite effect of devaluing the property.'
If you are unsure about the possible benefits of remortgaging, independent advisers at The MarketPlace is offering borrowers an obligation-free review of their current mortgage arrangements. It gives homeowners the chance to see whether they can get a better deal than the one they are currently on and to see how much they could benefit by switching.
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