Advice required on remortgage

stevedresden

House worth £190k with an outstanding mortgage of £80k

We are planning to get the cellar or loft converted into an extra room and the average quotes have been around £18k

Mortgage deal with Nationwide comes to an end in October, so my dilemma is whether to remortgage and put another £20k on it, or cash in my £20k ISA to cover the building works

Any advice welcome

holly_hobby

If the mortgage interest rate is higher than that being recd on your ISA - then you should cash in your ISA.

Its always wise to try & keep some pennies for an emergency fund though - so you may want to just use some of your ISA (if this is your only pot of savings) and the above re interest rates is relevant.

Hope this helps

Holly

JimmyTheWig

Not dissimmilar to our situation this time last year, only our mortgage deal (with Abbey) was up in December. And we didn't have enough savings to cover it.

Your choices with the mortgage are to remortgage for the full amount you need - you will have to pay any early redemption penalty on your existing deal and lose the terms of your existing deal (which may be better or worse than what they're offering now) - or to take a second loan for the new money - complete with its own arrangement fees, where applicable, and early termination penalties.
The advantage to this second way (which is what we went with) is that you don't have to pay possibly hefty penalties to end your main mortgage, but the disadvantage is that you then have two loans which means you will be tied to Nationwide unless you terminate a deal early at some point or let one run at SVR.

Your other options are to wait until October for work to begin and remortgage without penalty or to use your ISA.

My thinking would be, for you, to time it so that you use some of your ISA and some money from a remortgage in October.
With our loft, for example, we had to pay so much when they started work, more when the first phase was done, etc.

mambo69

if you stay with nationwide its additional borrowing not a remortgage so you end up with 2 independent mortgage accounts