Planning rules: how to unblock the funds for your home extension Unfortunately, your credit rating is likely to have declined since you took out your mortgage. Properties purchased in recent years are likely to have fallen in value, not least because valuations are carried out more stringently. Many families will also have seen their income fall and expenditure increased, thanks to rising bills. This problem will be exacerbated if your reason for home improvements is a growing family. Lenders have been forced by regulators to tighten lending criteria, which means tougher affordability tests. Many borrowers will be disappointed to discover that they might not even qualify for their existing loan if applying today, so a further advance on the same terms will be out of the question. Mr Hollingworth said: "Lending criteria may have moved against you, and a new valuation may show reduced equity. These factors can push you into a more expensive price bracket, or make it difficult to raise finance at all. Problems are particularly acute for those with interest-only loans, as most of the main banks, such as Santander, Royal Bank of Scotland, Lloyds and Halifax, will not entertain such applications. On rare occasions you may be able to borrow the additional amount on a repayment basis, while keeping the interest-only deal for the main home loan. More likely is that your lender may want you to switch your entire borrowings to repayment, which would send monthly bills rocketing as well as incurring additional remortgage fees. Anyone who got their original mortgage on self-certification terms can forget about applying for a further advance. But do not despair. Despite these problems there are still ways to raise the cash - as we explain below. Flexible and offset loans If you have an offset loan, reduced by positive savings balances, you can draw down the cash you need easily and cheaply without even asking. Other flexible mortgages allow overpayments, which should leave you in credit. In theory, you should be able to borrow this money back. However, tread cautiously as some lenders, such as Santander, will check your financial position again, which could lead to an advance being refused or higher interest charges applying. Woolwich, though, offers a pre-agreed drawdown facility, charged at a standard variable rate of 4.99pc. Money can be drawn at any time with a £5 fee. Ask your existing lender The easiest and cheapest way to raise the cash is to ask your existing mortgage lender for a further advance. Most lenders will require you to borrow either at their standard variable rate, on a special home improvement loan, or with one of their current market offerings. It is vital when considering options to include arrangement fees. Most home improvement loans are smaller than primary mortgages, so the fees can have a huge impact on the overall cost of the loan. Ray Boulger of John Charcol said: "This is one time when opting for the standard variable rate can be the best option. It will normally come without a fee, or a very low one. When borrowing small amounts, fees are an important part of the equation. Expect to pay more than your current home loan, especially if you are on a low-cost deal. For example, some C & G borrowers will be on a lifetime tracker, currently charging just 0.67pc. However, those looking for an advance on this deal will pay a rate of 6.19 percentage points above the Bank Rate, giving a current payable rate of 6.69pc. Some lenders have specific rates for further advances, which may be higher than their current mortgage deals. Halifax, for example, currently charges 5.69pc for further advances on a two-year fix, provided that you have at least 40pc equity in the property. But you also have to pay an £895 fee and a £99 booking fee. Consider remortgaging This can be an opportune moment to see if you can cut borrowing costs by remortgaging. For example, Principality Building Society is offering free valuation and legal work on remortgages for its two-year fix, which charges 2.79pc with a £999 fee. Again borrowers need 40pc equity in their home. Challenge valuations Lenders use a "remote automated valuation" model, which is not necessarily reliable. You can also ask your lender to base the valuation on the price after the work has been completed. Most will be happy to do so. If not, consider seeking short-term finance, then applying again after the work has been completed using the additional mortgage funding to pay off the more expensive short-term loan. Short-term loans If your lender won't extend the mortgage, and you are unable to remortgage, you could look at a secured or unsecured loan. These will have higher interest rates, and you will have to pay the money back more quickly. Tesco currently charges 5.7pc for loans of between £7,500 and £15,000, which increases to 7.6pc for those borrowing up to £25,000. Both rates assume 10-year repayments.