Short Term Borrows Or Mortgage?

athomps2

My wife and I own a house each. We intend to convert a flat in one of these houses for ourselves, move in and dispose of the other house.

What is the cheapest way to borrow about £60,000 needed to finance the conversion of this flat? Work will take between 11-14 weeks and we will then be able to move and sell my house. Profits from the sale of my house will then be used to repay the flat conversion costs loan. The flat will be in a house with another tenant and we will own the freehold of the building and both flats.

Any sugestions?
Currently both properties are mortgaged (one in my name and one in my wife) and there exists sufficient security in either property to raise the capital by means of mortagage application. Is there a more economical means of doing this as the cash is only needed in the short term?

Doozergirl

A mortgage is generally the cheapest way of borrowing.

If you remortgage your house before the sale, for short term borrowing make sure you go for something that has low set up and exit costs over low interest rates.

If you remortgage the house that is to be converted, make sure you can overpay by the £60,000 you intend to borrow.

Use an independent, whole of market mortgage broker to find the deal for you, not the high street - it'll limit your options and you'll probably end up paying too much.

HTH

athomps2

Thanks HTH. Note the points you make about low set up and exit costs against low interest rate and the need for best indepenence.

Problem is I'm not convinced a re-mortgage is the best route. Do you know of anything more inovative - Overdraft large short term loan, etc. And what are our chances of securing such an item, both work, good credit scores, long term with banks etc.....

AJ

Doozergirl

If you find anything with a better interest rate than a mortgage, let me know. Seriously!

We have an ovedraft secured against a house which is useful only for very short periods of time (usually before a remortgage) because it has a poor rate of interest and high fees - atm, we can get in and out of a mortgage for £750 excluding interest of course and, with an interest only mortgage, you don't have to find any of the capital repayments until you sell. With any kind of loan, you have to repay capital and the term is shorter than a repyment mortgage so the repayments each month would be significantly higher.

It's what suits us best. If I knew something more clever, I'd tell. I really would be interested if anyone knows of anything else too.