Is this a good idea?

SazM030306

I need to know if this is a good idea or not.

At the moment our mortgage is £45000 and we're paying £335.10 a month at 5.59%
We also have a loan of £20000 paying £229.46 at 6.9% (18m old)

As I will be starting college in Sept full time and we will be losing my pt wage, we will find it hard.

I was thinkinig would it be a good idea to remortgage for the whole amount of loan and mortgage and pay it off over longer, paying less per month therefore having more to spend each month (on bills I might add lol).

Any thoughts?

Thanks, Sarah x

happybroker

It would be a shame to lose the 5.59% on the mortgage as you will struggle to get a deal near to that, I guess you may have early repayment charges on that account also.

Paying the loan over the longer term will increase the overall cost of the debt and it will become secured on the house so if you default you will lose the proprerty potentially. The only benefit is the reduced monthly payment but that is the only benefit.

To avoid losing the good rate you have you could speak to your lender about rqaising a further advance for the £20k enabling you to pay it over a longer period, the costs involved would probably be less also.