Personal Loan or More on Mortgage

paddeo

We need to borrow £45k for a house extension. We currently have £118k borrowed on a mortgage with 18 years to go.

Should we add to the mortgage or get a personal loan?

We are 1 year into a 5 year fixed deal with the Clydesdale. If we go the mortgage route must we borrow the extra from the current lender?

TIA

Pat Long

regularsaver1

What term do you want the advance over? personal loans are usually a maximum of £25k and terms of around 7 years. mortgage obviously has the longer term, can depend on equity at present

What is your current value of your property?

Have you approached your current lender? is there a reason why you don;t want to do it with them?

paddeo

Clydesdale have agreed the money but I thought i would just check other avenues. The property is worth 350k so we have equity.

They want to arrangement fees etc etc.

Do I have to take a mortgage extension with current lender?

regularsaver1

No - but I would think you would have fees elsewhere too, and they would have to ask Clydesdale's permission. They may want to do a valuation also, and prove income, whereas you may not have to with existing lender

paddeo

Capital One Homeowner Secured personal loand will let us borrow £40k for 15 or 20 years at 5.9% APR.

Is that a good deal? The Personal Loan section of this site says that Secured Loans should be the last resort. Why are they considered so bad?

regularsaver1

Would you rather have 2 payments rather than one?

Is there an arrangement fee? valuation? penalties for repaying earlier?. Is the 5.9% fixed?

Mosts of them posts are suggesting not to borrow for debt consolidation ect whereas yours is for your home. But whether you increase mortgage or take a separate secured loan - its still the same as is secured on your home.

You will not get an unsecured loan on that amount so as said in above paragraph, mortgage and secured loan is same.

Did you not need the £45k?

paddeo

We could raise the 5k ourselves rather than borrow it so dropped the loan amount to 40k.

No the 5.9% is not fixed.

>>Is there an arrangement fee? valuation? penalties for repaying earlier<<

"no upfront charges or valuation fees", i wouil expect there would be a early repayment charge. If i am in a position to repay early I will pay off the mortgage.

regularsaver1

They will just ask permission of your lender as your lender holds 1st charge

paddeo

I have about 11k in an ISA. Does it make more sense to use that to lower the amount of the loan needed?

regularsaver1

It is not for me to say. Seeing as the ISA is tax free though.
what were you saving the £11k for?