Advice on Funding Home Improvements

JABWootton

Advice on Funding Home Improvements

Currently have a Mortgage for £60,000

House is valued at £140,000

Looking to Borrow £30,000 for Home Improvements

What would be the cheapest way to borrow.

Can I borrow against the Mortgage or would another type of loan be better.

If the Cheapest is against the Mortgage do I need to just contact the lender

Thanks In Advance

MortgageMamma

It depends really on whether you are tied in to your current mortgage and how long it has left to run.

If you have a good deal of time to pay off the mortgage and are not tied into the mrotgage then a remortgage would work best.

If you are tied into mortgage or want to pay off borrowings over a shorter term you could fund on low interest rate credit cards or secured loan

whichever way you do it, check out remortgaging/credit cards before doing a secured loan

JABWootton

MortgageMamma wrote:

It depends really on whether you are tied in to your current mortgage and how long it has left to run.

If you have a good deal of time to pay off the mortgage and are not tied into the mrotgage then a remortgage would work best.

If you are tied into mortgage or want to pay off borrowings over a shorter term you could fund on low interest rate credit cards or secured loan

whichever way you do it, check out remortgaging/credit cards before doing a secured loan

Thanks for the advice

Currently have 2 Year (Remortgage) which has 16 months left to run.
We always remortgage after 2 years due to better deals
17 Years left on Mortgage
Would like to add it to current Mortgage as we have never had a credit card and do not intend to start now.
Secured Loans seems expensive as only have 4.78% on current 2 year mortgage.
So keeping with a rate of say 4.8% +/- would be cheaper for us

MortgageMamma

the key question is though, are you tied into your mortgage contract, i.e. will you incur and early repayment charges should you switch lender? If so, you may be better off asking your existing lender for a further advance

JABWootton

Yes am tied in until end of 2nd year
Will ask lender for advance/increase in Mortgage
Thanks for your help

MortgageMamma

no problem, come back if your current lender wont help but im sure they will

stevenclarkuk

JABWootton wrote:

What would be the cheapest way to borrow.

Can I borrow against the Mortgage or would another type of loan be better.

If the Cheapest is against the Mortgage do I need to just contact the lender

Thanks In Advance

This depends on what your idea of cheapest is?
If you put the £30000 onto your mortgage for the rest of your mortgage term (17years) then at an interst rate of 4.8% you would be paying approx £13900.00 in interest alone over the term.

If you were to reduce that amount to 10 years through a loan at 5.9% you would only pay approx £9800 in interest. A saving of over £4000!!

So When you say cheapest, do you mean least amount each month in which case adding to the mortgage might be better.

Or if you meant cheapest over the term... Then a loan (or a compromise between the 2) with a reduced term might be better.

Although as discussed above, if added to your mortgage and your mortgage supplier allows you to make overpayments then this might allow you to reduce the outstanding balance a bit quicker and still benefit from a lower interest rate (Although this could rise over the next 17 years)

steven

regularsaver1

some lenders allow you to do a futher advance at a lower term to rest of mortgage