Extending your property can add significant value while enabling a better quality of life for you and your family. But how do people fund their home extensions? 

adam knibb architects - how to pay for a home extension - home improvements - granddesignsmagazine.com

Image: Adam Knibb Architects

There are a few options available when it comes to funding your home improvement and maximising your budget for your grand design. We asked the property advice gurus at HomeOwners Alliance for advice on financing your home extension. 

Use savings

With interest rates so low, you may feel that investing your savings in your home makes sense and avoids any additional borrowing. If you are looking for a return on your investment, choose your project carefully.

For example, HomeOwners Alliance's recent research with the Federation of Master Builders and The Guild of Property Professionals found that removing an internal wall to create an open plan kitchen and diner was the best way to add value to your home. It could cost around £3,500 but add £48,000 to the average London property.

a modern extension being built - grand designs

Image: HomeOwners Alliance 

A 0% credit card

If your project is quite modest then a credit card is also an option. Look for a 0% purchase deal which will give you a fixed period to repay the balance without paying any interest. This has the added bonus of letting you spread the costs of your project over one or two years.

Remember that when the deal ends after the fixed period, you would need to either have cleared the balance or consider switching to another 0% deal to avoid paying interest on the outstanding amount. If you miss a payment, for whatever reason, you could lose your 0% deal.

Remortgage

A popular option for paying for major home improvement projects is to increase your mortgage. If you have equity in your home, then by borrowing more on your mortgage you can free up cash to pay for your project. Mortgage funding will usually offer the cheapest rates when compared to loans and credit cards, but you will be extending your borrowing and the amount you will be paying for years to come so it’s important to work out the full costs.

Use the opportunity of remortgaging to shop around and check you are on the best mortgage deal — switching mortgages can save you money and help reduce the impact of a bigger mortgage. Speak to a fee-free mortgage broker to check what deals are available. They will highlight any fees and penalties of switching mortgage and help find the best deal for you.

It’s worth looking at each of the options above, costing them up and considering the pros and cons, now and over the next few years, as well as seeking expert independent financial advice before you proceed.

 

Are you planning on building an extension? Let us know by tweeting us @granddesigns or posting a comment on our Facebook page. For more expert advice on financing and planning a home extension, head to the HomeOwners Alliance website

 

RELATED ARTICLES

How much does an extension cost?

Double storey extensions 'could be allowed without planning permission

More on Extensions...

Kevins Column

Top self build highlights at Grand Designs Live 2019 hosted by Kevin McCloud

Find top experts, specialist exhibitors and a wealth of inspiration for your self-build or renovation project all under one roof.
visit-award-winning-grand-designs-live-hosted-by-kevin-mccloud
 
 
discover-this-cottage-extension-with-a-difference
Extensions

Discover this cottage extension with a difference

Take a look at this impressive cottage extension made from wood and salvaged materials.
clever-ways-to-gain-an-extra-bedroom
Extensions

6 clever ideas for gaining an extra bedroom

From converting a loft to extending your property, consider these key ideas for adding an extra bedroom (and extra value) to your home.
werner-loft-ladders
Extensions

How loft ladders can make the most of your storage

Discover how you can make the most of your loft space with modern loft ladders that store away easily.
modern-extension-with-mezzanine
Extensions

Inside a double-height extension to a London terraced home

This modern home extension has just been crowned overall winner at the Don't Move, Improve awards 2020.
how-to-pay-for-a-home-extension
Extensions

How to pay for a home extension

Considering a home extension but still working out the figures? Have a read of our top tips on how to finance a home extension.
dont-move-improve-extension-ideas-2020
Extensions

5 inspiring extensions nominated for a DMI Award

These 5 intriguing home extension projects are all up for a Don't Move, Improve award. Let's meet the nominees...