help please - loan or mortgage

danemi1

We currently have 7 years left on our mortgage and we are tied in to our current rate for about another two months - we are about to start an extension and other home improvements - apparently with our current mortgage product we can borrow more money a bit at a time - ie when doing an extension - just write out cheques out as we need them and switch card things - which is great because w dont know if its going to come to £23, 24 or 25k - hopefully no more than that. We can pay back as little or as much each month as we want as long as it covers the minimum payment (interest). After this 2 months is up - what do we do then - we only have 7 years left on the mortgage so we can either add it to the new product and pay off the new amount over the course of 7 years or we can keep our mortgage as it is and take out a loan to pay the rest off - but forgive me as I am not clued up with all the different products out there but the interest rate for loans seems mahussive - can anyone advise me what is best thing to do - we were thinking take a loan out over 10 - 15 years but wow the rates are so high we would be better sticking with the 7 yr mortgage product

Really appreciate any and all help

Thank you

ELaine

trulysaintly

danemi1 wrote: »

We currently have 7 years left on our mortgage and we are tied in to our current rate for about another two months - we are about to start an extension and other home improvements - apparently with our current mortgage product we can borrow more money a bit at a time - ie when doing an extension - just write out cheques out as we need them and switch card things - which is great because w dont know if its going to come to £23, 24 or 25k - hopefully no more than that. We can pay back as little or as much each month as we want as long as it covers the minimum payment (interest). After this 2 months is up - what do we do then - we only have 7 years left on the mortgage so we can either add it to the new product and pay off the new amount over the course of 7 years or we can keep our mortgage as it is and take out a loan to pay the rest off - but forgive me as I am not clued up with all the different products out there but the interest rate for loans seems mahussive - can anyone advise me what is best thing to do - we were thinking take a loan out over 10 - 15 years but wow the rates are so high we would be better sticking with the 7 yr mortgage product

Really appreciate any and all help

Thank you

ELaine

Hi Elaine,

It depends on the full details of your existing mortgage - for example if you are on something like an Open Plan arrangement, then there will be T's & C's on how much you will be paying for any monies drawn down - the rates can be different and you may not be able to borrow the extra on a 'deal' - you may be limited to SVR.

Some mortgage deals taken out more than 2 years ago allow you to drawdown funds on the same deal as at present - however with your current deal ending it may become complicated.

Before you look to proceed I suggest you consult an independent adviser to review your overall situation - extending your mortgage term is not a decision to be taken lightly.

getmore4less

Some details of your mortgage would help

danemi1

the current mortgage ends in 2 months so I will be looking for a new product and will then be starting afresh either with the original amount and the extra as a seperate loan OR making the mortgage bigger to incorporate the extra and then it will be part endowment (which is what I originally have) and part repayment for the extra - at least thats how I understand it??????

danemi1

I guess what I am asking is - at the end of the two months - will I be better taking out a loan for the extension costs or looking for a part repayment mortgage to run alongside my endowment - do the rates differ widely? Sorry am not very good at this morgage and loans milarky - no experience of it all - I am grateful for your help peeps xxx

DVardysShadow

I would suggest an offset mortgage. Borrow the max you could possibly need and put the surplus into the offset account until you need it.

danemi1

DVardysShadow wrote: »

I would suggest an offset mortgage. Borrow the max you could possibly need and put the surplus into the offset account until you need it.

does this work when the main existing one is an endowment with only 8 years left to run??? thanks for your advice x