How To Finance A House Extension
Before we dive into financing options, it’s important that you understand the costs associated with a house extension. The average cost of an extension depends on several factors such as the size of the extension, the materials used and the level of finish you want.
According to the Royal Institute of Chartered Surveyors (RICS), the average cost of a single-story extension is around £30,000 to £50,000 whilst a double-story extension can cost anywhere from £50,000 to £90,000.
Therefore, financing a house extension can be a tricky task due to the amount of capital required.
What Are The Financing Options For A House Extension?
1. Remortgaging
Remortgaging involves switching your existing mortgage to a new lender or a new deal with your current lender. By remortgaging, you can release equity in your home to finance your extension.
This means you’ll be borrowing more money than you currently owe on your mortgage, which will increase your monthly mortgage payments. However, the advantage is that the interest rate on a mortgage is usually lower than other forms of borrowing.
2. Home Improvement Loan
A home improvement loan is a secured loan specifically designed for home improvements. You can borrow a fixed amount over a fixed term and pay it back in monthly instalments.
The interest rate on this type of loan is usually higher than a mortgage but lower than a credit card or personal loan. If you want to use this type of finance option, you’ll need to speak to a broker that offers home extension loans.
3. Personal Loan
A personal loan is an unsecured loan that can be used for any purpose such as a house extension. The interest rate on a personal loan is typically higher than a mortgage or home improvement loan but lower than a credit card. It’s also available from a range of lenders, including banks, building societies and online lenders.
4. Equity Release
Equity release is a way to release some of the value in your home without having to sell it. There are two types of equity release: lifetime mortgages and home reversion plans.
With a lifetime mortgage, you borrow against the value of your home but you don’t have to make any repayments until you die or sell your home. With a home reversion plan, you sell a percentage of your home to a provider in exchange for a lump sum or regular payments. Both options can be expensive and the interest rates can be higher than other forms of borrowing.
What’s Involved To Extend A House?
Once you’ve decided how to finance your house extension, it’s time to plan and execute the project and below are some steps to follow:
1. Get Planning Permission
Before you start any work, you’ll need to get planning permission from your local authority. This is a crucial step in extending your house because it ensures that your project complies with local planning regulations and won’t cause any harm to the surrounding environment.
Planning permission is required for most house extensions and you’ll need to submit an application to your local authority detailing the proposed work, including plans, elevations and site location.
To ensure your planning goes smoothly, it’s highly recommended that you hire an architect. Although an architect’s fees can be costly, it’s a worthwhile investment to ensure you get your planning permission.
Once submitted, your local authority will review your application and consider factors such as the impact on the local area, the size of the extension and any potential issues such as access and parking. The process can take up to eight weeks and it’s important to note that some applications may be subject to further review or appeal.
2. Set a Budget
Once you have planning permission, it’s time to set a budget for your extension. This will depend on the size of the extension, the materials used and the level of finish you want. It’s important to be realistic about your budget and to factor in any unexpected costs, such as planning fees, building regulations and professional fees.
It’s also worth getting multiple quotes from builders and tradespeople to ensure you’re getting a fair price.
3. Choose Materials
The materials you choose for your extension will depend on your budget and the style of your home. You’ll need to consider factors such as the cost, durability and maintenance requirements of the materials, as well as their impact on the environment.
Some popular materials for house extensions include brick, stone, timber and glass. It’s worth discussing your options with your professional to ensure you choose materials that are appropriate for your project and meet your requirements.
4. Prepare the Site
Before any construction work can begin, the site will need to be prepared. This involves clearing the area, installing temporary fencing and creating access for machinery and equipment.
It’s also worth considering the impact of the extension on your neighbours, such as noise and disruption. You should communicate with your neighbours in advance to let them know about the project and to address any concerns they may have.
5. Build the Extension
Once the site is prepared, construction work can begin. This will involve digging foundations, constructing walls, installing windows and doors and adding any fixtures and fittings. It’s important to ensure that the work is completed to a high standard and that all regulations and safety standards are met.
During the construction phase, it’s worth staying in regular contact with your builder to ensure the project is progressing as planned and to address any issues that may arise.
6. Final Touches
Once the construction work is complete, it’s time to add the final touches to your extension. This will involve painting, decorating and installing any fixtures and fittings, such as kitchen units and bathroom fixtures. It’s important to ensure that the finishes are of a high standard and that they meet your requirements.
Conclusion
Extending your house can be an exciting project that can add value to your home and enhance your living space. However, it’s essential that you plan the project carefully, set a realistic budget and choose the right financing option.
