Remortgage to Fund Home Improvements with an Interest-Only Solution

Helping Homeowners Secure Better Rates and Fund Renovations

If you’re nearing the end of your current mortgage deal and looking to release funds for property upgrades, like a new kitchen or bathroom, a strategic remortgage could be the solution. In this case, a professional couple in their 50s from the South East of England successfully remortgaged to fund renovations—without increasing their monthly payments.

Customer Overview

This couple, both professionals in their late 50s, owned a flat situated above a commercial property. Their existing mortgage with TSB was ending soon, and they wanted to secure a better interest rate and raise extra capital for significant home improvements over a 14-year term, which included exploring NatWest’s interest-only options.

The Challenges They Faced

• Approaching the end of a fixed mortgage rate with higher follow-on rates looming
• Need for £30,000 in additional borrowing to fund home improvements
• Desire to avoid significantly increasing their monthly mortgage payment
• Property above commercial premises, which limited lender options
• Initially tied to an early repayment charge with their existing lender

The Remortgage Solution Provided

After a detailed consultation and review of mortgage options, the couple secured a competitive 5-year fixed interest-only mortgage deal through NatWest, structured around their financial goals. Some highlights of the remortgage solution include:

• Interest rate: Fixed at 4.15% until December 2030
• Term: 14 years on an interest-only basis
• Monthly payment: Maintained at £1,247.20, avoiding the jump to £2,812 on a repayment mortgage
• Additional capital raised: £30,000 for a new kitchen and bathroom
• Lender choice: NatWest was selected due to compatibility with flats above commercial units

Why Interest-Only?

The couple opted for an interest-only mortgage because they plan to downsize and use proceeds from the future sale of their home to repay the capital. This strategy allowed them to reserve monthly cash flow while still accessing £30,000 in equity for home upgrades and aligning with NatWest’s interest-only remortgage options in 2025.

Added Flexibility and Features

• No tie-in after the fixed rate ends
• Portability of the mortgage if they decide to move
• Overpayment allowance of up to 20% annually without penalty

Results and Benefits Achieved

• Retained financial stability with nearly identical monthly outgoings
• Raised £30,000 for home renovation without additional short-term burden
• Avoided higher fixed rates their existing lender couldn’t match
• Gained peace of mind with a protected, fixed rate for the next five years

“We’re glad we opted for the interest-only route. It gave us the freedom to upgrade our home without the stress of increased payments. We’re also protected from any rate hikes for the next five years.”

Frequently Asked Questions

How much can I save monthly by consolidating credit card debts into a mortgage?

In this case, the mortgage option selected wasn’t used for debt consolidation but for releasing additional funds. However, choosing interest-only over repayment terms helped the couple avoid a payment increase of over £1,500 per month, specifically with a NatWest remortgage scheduled for 2025.

Can you remortgage to fund home improvements?

Yes. In fact, raising additional funds for home upgrades—like kitchens, bathrooms, or extensions—is one of the most common reasons people remortgage.

Does remortgaging affect my credit score?

Remortgaging can result in a temporary impact due to credit checks, but if handled properly and payments remain up to date, it typically does not have a long-term negative effect.

What documents are required for a remortgage application?

• Proof of income (payslips, bank statements)
• Mortgage statements
• IDs and proof of address
• Details of assets and liabilities

Can I repay a fixed-rate mortgage early without penalties?

Fixed-rate mortgages usually involve early repayment charges. In this scenario, the couple was advised not to repay their current mortgage before the early repayment penalty period ended, saving them over £3,200.

Ready to Restructure Your Mortgage for Flexibility or Renovation Goals?

Whether you’re coming to the end of your fixed-rate period or simply looking to release funds for home improvements, our experienced team can guide you through the best remortgage options. We’ll search the market, compare rates, and structure a deal that matches your life plans—without unnecessary stress or jargon.

Contact us today for a free, no-obligation review of your mortgage options.