Home Improvement Loan

TightYorkie_3

The fixed period for my mortgage is shortly up for renewal and i will be seeking to (hopefully) get a good deal. I am also looking to borrow 6k to do some home improvements. Do you think i should borrow this extra against my new mortgage or should i go for an unsecured loan? My mortgage is currently around 42k. Thanks in anticipation for the thoughts

Martinslovechild

If you're only after £6K, then consider the Sainsbury's Credit Card which offers 0% on purchases for 12 months.

If you can afford to pay the balance off over 12 months then it will be completely interest free. To ensure that the balance is fully repaid at the end of the term, the monthly payment would be £500 per month.

If this is impossible, consider applying for a credit card offering a low rate on the life of the balance, e.g. Texaco (3.9%). With this in place, you make the £6K purchase with your normal credit card and immediately transfer the balance to Texaco where it sits at 3.9% until repaid. Simply make the monthly minimum payments (or preferably more if you can afford to).

TightYorkie_3

Thanks, certainly something to think about

nh

If you remortgage and borrow an extra £6k, depending on how long you have left on your mortgage term, you could end up paying back double what you borrowed. Over 25 years at, say, 5%, that is a lot of interest to pay in total even if your monthly payments don't go up that much.

If you do remortgage, consider a loan that allows overpayments (eg Nationwide) and overpay on your mortgage the amount you would have paid to an unsecured loan. That means you get the low interest rate but don't end up paying loads cos you will have paid off the extra £6k in overpayments.

Also, make sure you are not stretching yourself (probabaly you are not with just £48k loan) because if you can't make the repayments you could lose your house. If you don't make the repayments to a credit card/unsecured loan, at least your house is safe.