A recent survey by Nationwide BS has shown that just under half of homeowners are planning to make home improvements compared to only 8% that are planning to move. The majority of those planning to make improvements had an update of their decor in mind to modernise the home but almost 1 in 10 cited increasing living space as the reason.
These figures are unlikely to come as a surprise to homeowners that have considered moving recently. The market remains slow in many areas but even if you can sell your property and find a new one at the right price there can be huge costs to contend with.
The purchase of a new home does not just demand the provision of a big deposit but carries a number of ancillary costs. Survey fees, legal costs, mortgage arrangements and still often the biggest of all stamp duty land tax.
The much derided system of calculating stamp duty means that stepping up form a purchase price of £250,000 to £255,000 would see an increase of more than £5,100 in stamp duty. Those now buying a property with a purchase price in excess of £2 million would pay more than £140,000.
All in all it can cost a lot to move home so it’s no wonder that homeowners would consider improving their home. Raising the money to complete big improvements could well be funded through an extension to the mortgage. That could come from a drawdown of funds if the current deal is flexible enough but is more likely to require a further advance or a remortgage.
If there are no early repayment charges in place then it could be the right time to review the whole mortgage and borrow a little more to fund the work. Mortgage rates will be lower than other forms of borrowing although they can often be structured over a longer term which could cost more in interest over the life of the loan.
With the ONS recently reporting that real household actual income per head fell to its lowest level since the second quarter of 2005, it looks likely that homeowners will continue to consider improving rather than moving for some time to come.