Can You Remortgage to Fund Home Improvements in 2026?
- 2 days ago
- 11 min read
Understand how releasing equity works, what it costs, which improvements add real value, and whether remortgaging is the smartest way to fund your project in 2026
We are FCA authorised (496907) • 25+ years’ experience • Highly Reviewed (4.9★) on Google
Key Points
Most lenders allow capital raising up to 85% LTV
Loft conversions and extensions add the most value
Green improvements may qualify for 0% lending
Quick Answer
Yes, you can remortgage to fund home improvements by releasing equity from your property. Most lenders allow you to borrow up to 80 to 85 percent of your home’s current value, with the difference between your new mortgage and the old balance released as cash. The key is having enough equity, passing affordability checks, and timing it around any early repayment charges on your current deal.
Updated: 7 April 2026
Written by Ben Stephenson, CeMAP-qualified Mortgage Broker.
Manor Mortgages Direct is FCA authorised, FRN 496907, has traded for nearly 30 years, is highly positively reviewed, 4.9 rated on Google, and has helped thousands secure the right mortgage. Bristol-based mortgage brokers, assisting clients nationwide.
Who Is This Guide For
Homeowners with equity who want to fund an extension, loft conversion, or kitchen renovation
Property owners approaching the end of a fixed rate who want to raise capital at the same time
Landlords considering energy efficiency upgrades ahead of the 2030 EPC C deadline
Anyone weighing up remortgaging against a personal loan or second charge for renovation costs
Table of Contents
How Does Remortgaging for Home Improvements Work?
When you remortgage to fund home improvements, you are replacing your existing mortgage with a new, larger one. The difference between what you currently owe and the new loan amount is released to you as a lump sum, which you can then spend on renovations, extensions, or any other work on your property.
For example, if your home is worth £350,000 and you owe £200,000, you have £150,000 in equity. A lender offering 80 percent loan to value would let you borrow up to £280,000, releasing £80,000 in cash after clearing your existing balance. This process is sometimes called capital raising, and it is one of the most common reasons UK homeowners remortgage.
The process works in the same way as a standard remortgage. Your new lender values your property, assesses your income and outgoings, and makes an offer. If you are already approaching the end of your fixed rate, this is often the most cost-effective time to raise capital because you avoid early repayment charges that might otherwise apply.
Most lenders do not restrict how you spend the capital you raise, though some may ask what the funds are for during the application. Home improvements are generally viewed positively because they tend to increase the property’s value, which strengthens the lender’s security.
How Much Can You Borrow?
The amount you can release depends on three factors: your property’s current market value, your outstanding mortgage balance, and the maximum loan to value ratio the lender allows for capital raising.
Typical LTV bands for capital raising
Up to 75% LTV: widest lender choice, most competitive rates
75% to 85% LTV: still broadly available, slightly higher rates
85% to 90% LTV: fewer lenders, stricter affordability checks, higher rates
Most mainstream lenders cap capital raising at 85 percent LTV. A smaller number of specialist lenders will consider up to 90 percent, though the rate and fee implications often make this less attractive. If your property has increased significantly in value since you bought it, you may find you have more equity available than you expected.
Affordability remains the main gatekeeper. Lenders stress-test your ability to repay the larger loan at a higher interest rate, typically around 7 to 8 percent, regardless of the rate you are actually offered. Your existing commitments, including credit cards, car finance, and childcare costs, all feed into this calculation.
Which Home Improvements Add the Most Value?
Not all home improvements deliver the same return. If you are borrowing against your property to fund the work, it makes sense to prioritise projects that are likely to increase your home’s value by more than they cost. According to industry data from 2026, these are the improvements that tend to deliver the strongest returns in the UK market.
Strongest value-adding improvements
Loft conversion: typically adds 10 to 20 percent to property value, with a return on investment of 60 to 75 percent. The biggest uplifts come from adding a bedroom with an en-suite in areas where extra bedrooms are in high demand.
Single-storey rear extension: can add 5 to 10 percent to value. Most effective when it opens up the kitchen and living space into a single open-plan area, which is what most UK buyers now expect.
Kitchen renovation: a well-executed kitchen remodel offers an average return of around 67 percent and may add up to 10 percent to your home’s value. This is often the most visible improvement to buyers.
Bathroom renovation: typically returns 50 to 70 percent of the cost and adds around 4 percent to value. A dated bathroom is one of the first things buyers negotiate down on.
Glass extension or orangery: these rank among the highest for return on investment in 2026, with returns of 70 to 108 percent reported in some areas, adding 5 to 10 percent to value.
It is worth noting that over-improving for your street can limit returns. If your property is already at the ceiling price for the area, a £60,000 extension may not add £60,000 in value. A broker can help you compare remortgage options against the expected uplift to make sure the numbers work.
What About Green and Energy Efficiency Improvements?
Energy efficiency upgrades deserve special attention in 2026 because several lenders now offer green mortgage products with preferential terms for borrowers who improve their property’s energy performance.
According to the Energy Saving Trust, green mortgages can offer lower interest rates, cashback on completion, or additional borrowing allowances for homes that meet or move towards higher EPC ratings. Some lenders offer interest-free borrowing between £5,000 and £20,000 specifically for energy efficiency improvements, repayable over two to five years.
Improvements that may qualify
Solar panel installation
Loft, cavity wall, or solid wall insulation
Air source or ground source heat pump
Double or triple glazing upgrades
New energy-efficient boiler or heating system
The UK Government is introducing new-format EPCs from October 2026, moving to a multi-metric system that assesses fabric performance, heating systems, energy costs, and smart readiness separately. For landlords, the EPC C deadline for rental properties arrives in October 2030, which means energy upgrades funded through remortgaging now could avoid more expensive last-minute work later.
Improving your EPC rating may also increase your property’s market value. Research suggests that moving up two EPC bands could add several thousand pounds to what a buyer would pay, while also reducing your monthly energy costs and potentially qualifying you for better mortgage terms at your next remortgage.
What Are the Costs and Risks?
Remortgaging is not free. Before committing, you need to weigh the costs of switching against the benefits of raising capital at mortgage rates rather than personal loan rates.
Typical costs to factor in
Early repayment charge: if you are still within a fixed or tracker deal, your current lender may charge 1 to 5 percent of the outstanding balance to leave early. On a £200,000 mortgage, that could mean £2,000 to £10,000.
Arrangement fee: your new lender’s product fee, typically £500 to £1,500, though some fee-free products are available at a slightly higher rate.
Valuation fee: usually £250 to £500, though many lenders offer free valuations as part of the remortgage package.
Legal fees: conveyancing for a remortgage typically costs £300 to £800. Many lenders cover this as a switching incentive.
Higher monthly payments: borrowing more means paying more each month. On a £50,000 capital raise at a five-year fixed rate of around 4.5 percent over 25 years, you would add roughly £280 per month to your repayments.
The key risk is that you are securing short-term spending against a long-term asset. A £30,000 kitchen funded over 25 years will cost significantly more in total interest than the same amount on a five-year personal loan, even though the monthly payments are lower. If your property value drops after the work, you could end up in a weaker equity position than before.
When Is the Best Time to Remortgage for Improvements?
The ideal time to remortgage for improvements is when your current fixed rate is ending, because you avoid early repayment charges and can shop the whole market for the best rate. Most lenders let you lock in a new rate up to six months before your current deal expires, giving you time to plan the building work alongside the remortgage timeline.
If you have recently bought your property, most lenders require at least six months of ownership before they will consider a remortgage, though some may accept applications sooner if you are remortgaging shortly after purchase with a significant change in circumstances.
In April 2026, the average two-year fixed remortgage rate sits at around 5.84 percent, with the average five-year fixed rate at approximately 5.75 percent. The slight inversion, where longer fixes cost less than shorter ones, reflects market expectations of future Bank of England rate cuts. For homeowners with good equity, competitive deals are available below these averages, particularly at 60 to 75 percent LTV.
Remortgage vs Personal Loan vs Second Charge
Remortgaging is not the only way to fund home improvements. Depending on your circumstances, a personal loan or second charge mortgage may work out better.
How the options compare
Remortgage: lowest monthly payments, longest repayment term, highest total interest cost. Best when your current deal is ending anyway and you have strong equity.
Personal loan: higher monthly payments, shorter term (typically 1 to 7 years), no security against your home. Best for smaller projects under £25,000 where you want to keep the debt separate from your mortgage.
Second charge mortgage: sits behind your existing mortgage, so you keep your current rate. Monthly payments fall between remortgage and personal loan levels. Best when you have a low rate you do not want to lose but need to borrow more than a personal loan allows.
If you are on a very competitive rate that you would lose by remortgaging, a second charge loan may preserve your existing deal while still giving you access to capital at a reasonable rate. A broker can model both scenarios to show you the total cost of each over the full term.
What Do Lenders Need from You?
A capital-raising remortgage follows the same underwriting process as a standard remortgage, but lenders may ask additional questions about what the funds are for. You will typically need to provide the following.
Proof of income: payslips, tax returns, or company accounts depending on your employment type
Bank statements: usually the last three to six months, showing regular income and spending patterns
Details of existing debts: credit cards, loans, car finance, and any other commitments
Property information: current value estimate, remaining mortgage balance, and details of the work planned
ID and proof of address: passport or driving licence plus a recent utility bill
Lenders generally view home improvement capital raising favourably because the work is likely to maintain or increase the property’s value. However, if you are raising a large sum relative to your income, expect the underwriter to scrutinise your affordability more closely than on a like-for-like remortgage.
Does Planning Permission Affect Your Mortgage?
Most lenders do not require you to have planning permission in place before they release capital, because the money is yours to spend once the remortgage completes. However, if you are planning a significant extension or structural alteration, it is worth understanding the permitted development rules before committing to the project.
Under current permitted development rights, you can build a single-storey rear extension of up to 3 metres on an attached house or 4 metres on a detached house without applying for full planning permission. Double-storey rear extensions must not exceed 3 metres in depth and must be at least 7 metres from the rear boundary. Side extensions must not exceed 50 percent of the house’s original width.
If your property is in a conservation area, is a listed building, or sits within a national park, permitted development rights may be restricted or removed entirely. In these cases, you should confirm planning requirements with your local authority before committing to a remortgage based on specific improvement plans.
Where the improvement requires building regulations approval, which covers most structural work, extensions, and electrical or plumbing changes, make sure you budget for the associated inspection fees and any design work needed to meet current standards.
FAQs
Can I remortgage for home improvements if I have a low credit score?
Possibly. Some specialist lenders will consider capital-raising remortgages for borrowers with impaired credit, though the rates will be higher and the maximum LTV lower. A broker can assess which lenders are most likely to approve your application based on your specific credit profile.
Do I need to provide quotes or plans for the building work?
Most lenders do not require quotes or architectural drawings at the application stage. The capital is released to you on completion of the remortgage, and you are free to manage the project yourself. However, having a clear budget helps you borrow the right amount.
Will the improvements be revalued after the work is done?
Not automatically. Your lender values the property at the point of remortgage, before the work begins. The increased value only becomes relevant at your next remortgage or if you sell. Some homeowners plan a further remortgage 6 to 12 months after completing major work to move into a better LTV band.
Can I remortgage for improvements if I bought my home less than a year ago?
Most lenders require at least six months of ownership. After that, you can apply, though the valuation will be based on the current market price rather than what you paid. If the property has not increased in value, your equity position may limit how much you can raise.
Is it better to save up or remortgage for home improvements?
It depends on the scale of the project and your financial position. Saving avoids interest costs entirely, but if the improvement adds value that exceeds the borrowing cost, or if the work is time-sensitive, such as before an EPC deadline, remortgaging may make financial sense despite the interest.
What happens if the building work goes over budget?
Your lender will not release additional funds mid-project. If costs overrun, you would need to fund the difference from savings, a personal loan, or a further remortgage once the work is complete. Building in a 10 to 15 percent contingency buffer is standard practice.
Summary
Remortgaging to fund home improvements is a well-established route for UK homeowners with sufficient equity. In 2026, competitive rates are available for capital raising at 60 to 85 percent LTV, and green mortgage products offer preferential terms for energy efficiency upgrades. The key is timing the remortgage around your existing deal, borrowing only what the project justifies, and choosing improvements that genuinely add value to your property rather than overcapitalising for the area.
Important Information
Your home may be repossessed if you do not keep up repayments on your mortgage. Manor Mortgages Direct is a trading name of Manor Mortgages Ltd, which is authorised and regulated by the Financial Conduct Authority (FRN 496907). Not all products and services mentioned are regulated by the FCA.
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