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  • FIRST POST
    • MissMegany
    • By MissMegany 13th Feb 18, 6:19 PM
    • 1Posts
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    MissMegany
    Overpay and re-borrow later or save now?
    • #1
    • 13th Feb 18, 6:19 PM
    Overpay and re-borrow later or save now? 13th Feb 18 at 6:19 PM
    Hi folks,
    My husband and I have 3 more years on a fixed-rate mortgage that we've been overpaying before we remortgage, and were thinking of borrowing more at that time to do up our kitchen/bathroom. We currently owe £136k on a £200k-ish value house (valued at £186k when we bought it).

    We've been overpaying by £500/month (limit allowed without changing the term) but could pay more. We're aware that interest rates may well go up when we need to remortgage.

    We were thinking of getting the kitchen/bathroom redone, which may involve an extension. I realise that's anywhere between £10-£50k.

    Should we:

    a.) Up our overpayments to our limit (with an emergency bufffer), and then in 3 years ask to borrow more?

    b) Up our overpayments to our limit, and then get a separate loan for the works.

    c) Carry on overpaying, but a bit less, in order to save about half, then ask the bank to extend our mortgage by the remaining half?

    d) Work out how much we need to save per month to achieve the total we need by a certain time, so that we can pay for the works without needing to borrow any extra money. Obviously this will mean not overpaying the mortgage, and it still may mean a small loan if it's more than we expect (isn't it always?).

    e) Get a loan now, and just get a nice new kitchen/bathroom sooner, and factor loan repayments into what we can afford to overpay.

    Any thoughts gratefully received! I realise that no one knows what the market is going to do in 3 years time, but input would be great!

    Thanks!
    Megan
Page 1
    • Blackbeard of Perranporth
    • By Blackbeard of Perranporth 13th Feb 18, 6:40 PM
    • 4,815 Posts
    • 29,230 Thanks
    Blackbeard of Perranporth
    • #2
    • 13th Feb 18, 6:40 PM
    • #2
    • 13th Feb 18, 6:40 PM
    Dont borrow more next year, save your £500 a month now for the kitchen. This will ultimately save you money in the long term, as you will not have to release funds next year..

    12 months will get you £6,000. If you borrowed next year, it will cost £6,000 on your mortgage plus transfer and solicitors fees. If your kitchen is more than £6,000, I am sure a couple more months wont hurt.
    Last edited by Blackbeard of Perranporth; 13-02-2018 at 6:41 PM. Reason: Ive been apostrophised!
    Every fairy story always ends the same way
    Hope, then tragedy at the end of the world!
    • Thrugelmir
    • By Thrugelmir 13th Feb 18, 6:49 PM
    • 57,432 Posts
    • 50,714 Thanks
    Thrugelmir
    • #3
    • 13th Feb 18, 6:49 PM
    • #3
    • 13th Feb 18, 6:49 PM
    Continue to overpay while actually deciding what you want to do and obtaining proper estimates of the costs involved. If you wish to borrow £50k plus. You haven't currently got any leeway.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • juniordoc
    • By juniordoc 13th Feb 18, 10:32 PM
    • 315 Posts
    • 258 Thanks
    juniordoc
    • #4
    • 13th Feb 18, 10:32 PM
    • #4
    • 13th Feb 18, 10:32 PM
    What rate are you paying on your mortgage now? Could you match or beat the interest rate in savings/high interest current accounts?
    As above you need more clarity on how much you need to spend before you can know what the best course of action is.
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