Rather than trade up, many families are now choosing to build an extension or convert the attic. Even a batch of home improvements, such as putting in a new bathroom, can often be enough for many to ring the changes.
Of course, before considering the finance, it is important to outline a brief with your architect and to work out a budget.
But equally important is how you choose to repay the loan. The lenders are now beginning to actively target the market. In the past, you needed a reasonable repayment history and a good deal of equity in your home but in these days of easy credit repayments, having a loan to value ratio of under 90 per cent is often enough to secure a further loan.
Most customers opt to simply add the extra amount to their outstanding home loan and repay it over that period. However, if the amount is reasonably small, it may make sense to repay it over a shorter time period or, indeed, to fix the amount. Most lenders will offer these options.
You can fix part of the loan and keep the rest variable. You can repay both in a monthly or other regular payment or you can opt for two separate repayment dates. The options are numerous.
Another recent innovation is that in the past, most lenders charged an additional premium for any sort of top up loan but now all the lenders offer extra at the same rate as the original mortgage. Indeed, most lenders will offer a new loan at the rates of interest applicable to new borrowers, whereas others will charge the same rates as applies to existing borrowers.
The one restriction which still remains is that you must have your original mortgage with the lender from whom you are seeking a loan. But even this is a thing of the past - Irish Nationwide and First Active both offer the service to the customers of other lenders and simply take a second charge on the home.
A First Active spokesman points out that there are problems over who holds the original deed, as well as the legal fees to pay for the relevant searches.
It is also important to remember that competition is so intense in the mortgage lending business that most lenders would prefer to offer you a deal than risk losing the business. This means that those with variable rate loans are in a much better position to negotiate as they have the potential to move their business.
But even those with large, fixed rates can usually negotiate a reasonable deal.
Of course, getting a further advance usually means paying additional costs in the form of administration and valuation fees. Most lenders will demand an up-to-date valuer's report. This will generally cost about £60, although many people are already hiring an architect to oversee the work and this can be part of that service.
Borrowers should also remember that their building insurance and life assurance will also both need to be changed following the renovations.
Of course, if you have recently taken out a large loan, it may be more difficult to secure funding through your lender. And some lenders will only offer the facility to those seeking £10,000 or more. Others may need to apply for a home improvement loan.
Another option, particularly for those who have a higher income than may be observed from their accounts, is to take out a second charge loan from a bank. This will mean a slightly higher rate of interest, but it should still be less than the rates applying to personal loans. AIB, for example, offers a 1.5 percentage point discount on its home improvement loan from the personal rate.
Personal loans are, of course, the most expensive, with interest rates often as high as 11 per cent or 12 per cent, and the repayment periods tend to be short and early repayments usually incur a penalty.
The one option which should usually be avoided is a home improvement loan from a kitchen or bathroom company. These usually charge very high rates of interest, despite seemingly attractive deals which may be on offer.
