Dreaming of a kitchen extension or a new bathroom? With savings squeezed and costs climbing, many homeowners are asking the same question: Can I use my mortgage to fund it? If your property’s value has gone up, you might have untapped equity sitting in your walls, and yes, that could mean your home can help pay for its own upgrade.
How Much Can You Really Release?
First, let’s talk numbers.
Say your home is worth £300,000 and you’ve got £150,000 left on your mortgage. That gives you £150,000 in equity. Most lenders will allow you to borrow up to 85% of your home’s value, sometimes more, depending on the lender and the purpose of borrowing.
In this case, 85% of £300,000 is £255,000. With a £150,000 mortgage already in place, you might be able to release up to £105,000, subject to affordability checks and lender criteria. Some lenders cap this lower if you’re borrowing for things like debt consolidation, so it’s always worth checking the specific deal.
Despite the Bank of England removing its formal affordability test in 2022, lenders are still required to assess your income, spending, and repayment ability under FCA rules.
Not sure remortgaging is right for you? You might also consider a further advance (borrowing more from your current lender) or a second-charge mortgage (keeping your current deal and taking a separate loan). These options can sometimes mean faster access to funds or more flexibility, though interest rates may vary.
Smart Uses of Borrowed Equity
If you’re going to borrow more against your home, it should ideally add value to it. That means thinking beyond surface-level cosmetic tweaks.
Some of the most value-boosting home improvements include:
- Loft conversions and rear extensions
- Open-plan kitchen/dining redesigns
- Energy-efficient upgrades (think heat pumps or insulation that boosts your EPC)
- Modernising tired bathrooms or outdated layouts
These projects don’t just make your space more enjoyable, they can genuinely increase your resale value, especially in sought-after postcodes. In some cases, adding an extra bedroom or bathroom can significantly lift your home’s market value.
Pitfalls That Can Cancel Out the Gains
Of course, it’s not a guaranteed win.
You could be left worse off if:
- Your renovation budget spirals out of control
- You over-improve beyond your local market’s ceiling price
- Property values fall while your loan size rises
- You extend your mortgage term so much that interest costs wipe out any upside
ERCs (early repayment charges) can be 1–5% of the balance you repay during your fixed or discount period, so check your deal’s terms and any overpayment allowances before committing.
And remember, many major projects like lofts and extensions need Building Regulations approval, and sometimes planning permission.
So, Should You Do It?
If your project is well planned, adds lasting value, and your finances are solid, using your home’s equity could be a smart way to fund it. But it’s not the right move for everyone.
Ask yourself:
- Is this renovation a need or a nice-to-have?
- Am I happy extending my mortgage term or increasing repayments?
- Will the improvements increase my home’s value, or just its cost?
Let’s See If the Numbers Work for You
If you’re considering remortgaging to fund a renovation, we’ll help you make sense of the options. We’ll show you how much you could borrow, what it might cost, and whether it actually makes sense for your plans.
📞 Call 020 8366 4400
📧 Or email enquiries@cedarhfs.co.uk to get started.