Financing home improvements

golly99

Hi

Wanting to have some work done on our house, was considering a remortgage with Nationwide for £15k, over the remaining period of the mortgage (21 years). Is this the best way to do this for such an amount or is it better to do a loan?

Cheers.

grumbler

The answer to your question doesn't exist unless you provide some extra information. What is your mortgage APR? How much can you repay every month?

Borrowing over 21 years is very expensive option even if APR is quite low.
Try to play with http://www.whatsthecost.com/loan.aspx.
For 5.89%APR (Nationwide BMR) adding £15K to mortgage will cost you £11175 in interest over 21 years. Repayments are £104 p.m.

6.4% APR loan with Nationwide over 10 years will cost only £5347 with monthly payments £170. For 7 years figures are £3649 and £222.

Now make your choice between low monthly payments and low total cost ...

The best way is to save first and not to borrow at all ...

golly99

Hi

Thanks for the reply, the proposed product was a fixed 3 year rate with Nationwide, I had doubts on whether the mortgage to finance would be the right way to go, think I'm going to investigate the loan option. Might be the possiblity of paying off biggish chunks as well, so the flexibility with a loan would be quite handy. Thanks for your help and the link to the calc, most helpful.

grumbler wrote:

The answer to your question doesn't exist unless you provide some extra information. What is your mortgage APR? How much can you repay every month?

Borrowing over 21 years is very expensive option even if APR is quite low.
Try to play with http://www.whatsthecost.com/loan.aspx.
For 5.89%APR (Nationwide BMR) adding £15K to mortgage will cost you £11175 in interest over 21 years. Repayments are £104 p.m.

6.4% APR loan with Nationwide over 10 years will cost only £5347 with monthly payments £170. For 7 years figures are £3649 and £222.

Now make your choice between low monthly payments and low total cost ...

The best way is to save first and not to borrow at all ...