increase mortgage or small loan?

missindecisive

hi everyone, advice needed please:money: we are thinking of doing some home improvements and will need approx £5000 to do so.

currently we owe £76000 with f/direct at 1.5% :T and could easily add an extra £5k onto our borrowing. dh says we should add the amount onto our mortgage and pay an extra £100 per month into it for the next five years.(must add we are already over paying about this much per month).

or; we could arrange a small loan at about 8.9% which would cost roughly the same for a similar time scale.

must admit, I do not feel easy about adding it onto our secured borrowing,but dh says its so much cheaper this way, is he right? i realise mortgage rates will probably rise sooner or later

which is the best choice? does it matter? any advice appreciated.

bbl_2

Are the improvements a need or just a want? If it was just a want i personally would aim to save what it would cost to do what you want

_Andy_

Is he sure FD will lend you further borrowing at the same rate?

Thrugelmir

_Andy_ wrote: »

Is he sure FD will lend you further borrowing at the same rate?

The additional lending will be at current rates and no doubt carry a product fee.

missindecisive

hi. yes we can borrow more on our offset mortgage if we wish, at anytime up to our agreed limit. there will be no product fee , or interest rate change for the added amount, it is set at 1% over base for the life of the mortgage. so if the base rate rises, so will our mortgage rate.

VIGILANT22

missindecisive wrote: »

hi. yes we can borrow more on our offset mortgage if we wish, at anytime up to our agreed limit. there will be no product fee , or interest rate change for the added amount, it is set at 1% over base for the life of the mortgage. so if the base rate rises, so will our mortgage rate.

Quotes :
yes we can borrow more on our offset mortgage if we wish,
with f/direct at 1.5%
we could arrange a small loan at about 8.9%

You really have to go away and reflect on your post, if you still can't reach a decision use a calculator!
Why do people become involved in finance when they don't understand a scoody.......:(

missindecisive

the whole point of this site is for friendly advice & help(is it not?) or is it just for cyber witches to swoop down and pick on people who really could just do with a bit of friendly advice. shame on you vigilant:D

VIGILANT22

missindecisive wrote: »

the whole point of this site is for friendly advice & help(is it not?) or is it just for cyber witches to swoop down and pick on people who really could just do with a bit of friendly advice. shame on you vigilant:D

Shame on you!!

Having an offset mortgage and not understanding it..:)

Phone 1st Direct and ask about drawdown

If you want to know how your offset works I suggest read here!!
http://www2.banking.firstdirect.com/1/2/mortgages/offset-mortgages;jsessionid=0000EtZtAEEAG9dM1jKEqEqVWmq:11jmjm8n8?clear=true