Home Improvements - money needed!

danemi1

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We have 7 years left on our endowment mortgage which amazingly is is still doing rather well but it is a job related endowment. It isnt a massive mortgage in fact by todays standards it is very low. We are just about to do an extension which will house a new kitchen and we also want an ensuite wet room. We need to borrow 30k ideally over 10 years 15 at most. We are with Barclays Woolwich for the interest part of our mortgage and they have something called a reserve fund..we can borrow up to 39k at any time and we can pay it back as much or as little as we want - we can even take payment holidays. only stipulation is that it has to be paid back at same time as mortgage(interest free part) but if we get to the 7 year point and we havent managed to pay the reserve fund back as long as we keep something owing on the mortgage even if its only a couple of grand then we can extend that and the reserve fund. The only thing with the reserve is that currently its rate is 4.99 which is good but we cannot fix it - it can fluctuate but 4.99 is the lowest it is anticipated to go. Hubby and I are careful people and have always fixed our interest only mortgage so we can budget accordingly. Mortgage rates are low just now but if they jump up we are snookered especially seeing as we really need to try and pay it off over the 7. Are we better to go with a loan - something that can be a fixed rate preferably over 10-12 years - can anyone advise or are we best to use the reserve fund - it does not cost us anything to set it up

dimbo61

First of all are you sure that this Reserve fund is still available ? have you checked with Barclays ?
You dont give the figures ie outstanding mortgage ? LTV ? income ? age ?etc
There are a number of good remortgage deals with 5 year fixed rates under 4%
You could always keep the endowment going as a savings/retirement pot and put the whole outstanding mortgage ( existing mortgage + new £30K ) onto a repayment basis over say 10/15 years.
Only my views as rates have never been this low

danemi1

Thanks for your reply - yes it is still available - have checked recently. Our endowment mortgage is under 50K and has 7 yrs remaining - out house is worth £225k. We need to borrow under £30k we can put the rest to it from savings. It is just we are used to having a fixed rate - ideal thing for us would be to have a 10 yrs fixed rate whether it be loan or mortgage. If we had a repayment mortgage this would probably have been a lot easier but there you go - it is as it is!
We are bothw orking hubby full time and I am part time. Hubby is 38 and I am 44

dimbo61

Any loan for £30K or £50K or even £80K is going to cost alot more than a mortgage IF you could even get a loan of that size so really you are looking at a mortgage or remortgage elsewhere.
First off I would give Barclays a call and see what they have to offer with little or no fees then have a look at other lenders and consider offset mortgages !
You can put your " extension money" into the offset account and pay for work in stages as it gets done YBS have a good 5 year offset fix at the moment ( ONLY MY VIEWS GOOD LUCK)

danemi1

thanks for that - have been ringing around and you are correct - anything fixed rate is silly money - way too high - so we are going with the reserve fund that the woolwich are offering us - we have 7 years left on our mortgage - the reserve fund has to be paid back by then or we can extend our mortgage (we are allowed to pay most of our mortgage off as long as we leave something owing) then finish the two together later. We can pay as much or as little each month - even take payment holidays (which obviously we wont do unless the wheel comes off) and best of all its free to set up. As I say our only worry is with it being variable but I guess if it looks as if its going to shoot up we can then look around for a fixed deal then. Thanks all x

dimbo61

If you can overpay the part of the mortgage at 4.99%