Borrowing options for £15K?

ami_cherry

Hello there,

This is my first post and I’m looking for advice on what the best way to borrow £15k for some house improvements (which will cost in total about £30k)?

I’ve already been offered the money as a re-mortgage via my current mortgage provider (Woolwich) at a rate of 4.99 but wonder if there might be other better ways to borrow the money.
(I’d like to replay it over about 5 years)

For example are there cheaper loans or could I get a credit card to cover this?
Or should I borrow the money via my mortgage but pay the builder by credit card to get ‘cash back’ (whatever that is)?

All suggestions gratefully received as my head is swimming with options and I’m a real borrowing notice (never had a loan or credit card before).

Thanks in advance.

[Deleted User]

Will your builder accept credit cards? Worth checking, as it is probably unlikely. So you may need a money transfer option on the card (eg MBNA).

Otherwise you're looking at loans. Doubt if you'll beat your mortgage rate, but I assume that's over a very long period so you'll end up paying a lot in interest over the long run. And of course would be secured on your house.

CLAPTON

4.99% is a very good rate
most unlikely you will do better than that
take it.

iolanthe07

4.99% is a very good rate

Except, as zx81 says, that it will be over a long period and so you will pay lots of interest even if the rate itself is low. You need to do a bit of research - a personal loan over a shorter period (you mention 5 years) at say 7.5% APR may turn out cheaper overall in the long run.

ami_cherry

Thanks guys, what about if I take a 0% credit card and use this to pay for the building work? Then switch the 'borrowing' each time the period is due to end?
Can I also withdraw cash on a credit card?

[Deleted User]

See my earlier point about whether the builder will accept a card and possible money transfers.

What you definitely don't want to be doing is getting cash out at an ATM, due to the fees and interest.

YorkshireBoy

ami_cherry wrote: »

I’m a real borrowing notice (never had a loan or credit card before).

Then it's highly unlikely you'll get anywhere near £15K in unsecured credit on a credit card.

Loans may be different, but again you won't get anywhere near the secured rate of 4.99% APR already 'in the bag'.

TonyMMM

I would take the 4.99% - after checking that you can overpay, and do that to clear the debt within the 5yr timeframe.

shop-to-drop

If your mortgage provider will allow you to make overpayments on extra part of your mortgage I think it would be the best bet. Just pay the extra so that you clear it in five years rather than the full mortgage term. You could try for a five year loan but the interest rate would be higher.

CLAPTON

iolanthe07 wrote: »

4.99% is a very good rate

Except, as zx81 says, that it will be over a long period and so you will pay lots of interest even if the rate itself is low. You need to do a bit of research - a personal loan over a shorter period (you mention 5 years) at say 7.5% APR may turn out cheaper overall in the long run.

It's the exception rather than the rule that a mortgage doesn't allow some measure of overpaying.

ami_cherry

I've checked an there is no overpayment or early payment charges with the 4.99 remortage. So I should only pay £750 in interest over the 5 years (or less if I clear it quicker). Can someone explain what iolanthe07 meant by 7.55 APR being better than 4.99?