Remortgage or savings? 30 October 2009 at 8:47PM in Mortgages & endowments 4 replies 559 views

VLT

Hello I need a little advice as I'm confused!

My partner and I are wishing to carry out some alterations in the home to improve our living space as we have looked into moving but would be hard pushed to find a bigger house for what we can afford.
So we have had quotes for the work coming in at approx 12k.
What I need to know is do we:-

Remortgage (current fixed at 6.29% till Aug 2011) would the extra borrowing be at this rate or lower?

or

Use our savings approx 7k and get a loan for the difference? If so what sort of interest rates could we expect to pay?

Thanks Viv

dimbo61

You need to speak to your lender and ask!
how much equity do you have in your home?
How long have you lived there and how much deposit did you put down, how much of the mortgage have you paid off !
Lots of things to take into account including can you afford the bigger mortgage!

VLT

Bought house for 92k in 2004 with a mortgage of 72k
Valued approx 18 months ago at 135k although I am sure this would be less now.
Mortgage currently 68K.

getmore4less

Moving costs money so that is a saving/money to invest in the current place but how long will this keep you there?

No point in doing it if you are still going to move in a year or two.

With that LTV borrowing the money should not be too big a problem as long as the income multiple is OK.

So what is the income and how big is the family?

I would borrow a bit more than you need on a flexable deal so you can overpay if the building comes in on budget but you have contingency if you over run.

Under funding is the big mistake people make since they then need to borrow more and lenders are not so keen to give out more money so soon.

I would keep as much of the savings as you can as a long term contingency/emergency fund

Rob71

Have you thought about an equity release loan rather than remortgage? It amounts to the same thing (you're borrowing money against the value of your house), but the term would be shorter and you'd pay less interest in the long term.

Just an idea...