We’d like to remind Forumites to please avoid political debate on the Forum.

This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Overpaying mortgage to then have some additional borrowing

Hi, i hope someone can help!

We would like to take out some additional borrowing on our mortgage for a loft conversion but currently Nationwide wont let us as we haven't paid off enough of our mortgage to allow for it. So, would it be worth overpaying our mortgage until we have paid enough off to allow for some additional borrowing? We could of course save the money rather than take it off the mortgage but I think that way would take longer for us to raise enough money....? What do you think?

TIA,

G3M

Comments

  • R_P_W
    R_P_W Posts: 1,527 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    impossible to say without you providing some numbers
  • dimbo61
    dimbo61 Posts: 13,727 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    What interest rate are you paying on the mortgage?
    How much equity do you have in the property?
    Income , age etc
  • g3m
    g3m Posts: 3 Newbie
    Ok....

    We still owe £148000, Nationwide value our home at £167000 (this isn't correct but they don't care about that!) We're 30 with 20 years left on our mortgage. We can afford to overpay/save £500pcm but already have £8000 in savings. Our interest rate is 2%.

    G3M
  • dimbo61
    dimbo61 Posts: 13,727 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    If you are only paying 2% on your mortgage you will get a cash ISA,s which pays more interest!
    Now nationwide are unlikely to lend you any more money for some time as your LTV is what 90% ( according to Nationwide!!)
    I would build up savings in cash ISA,s to pay for the work while paying the normal mortgage payment.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    g3m wrote: »
    We still owe £148000, Nationwide value our home at £167000 (this isn't correct but they don't care about that!)

    There's a marked difference between holding out to achieve a selling price and a firesale price to sell a property quickly.
  • Jonbvn
    Jonbvn Posts: 5,562 Forumite
    Part of the Furniture 1,000 Posts
    dimbo61 wrote: »
    If you are only paying 2% on your mortgage you will get a cash ISA,s which pays more interest!
    Now nationwide are unlikely to lend you any more money for some time as your LTV is what 90% ( according to Nationwide!!)
    I would build up savings in cash ISA,s to pay for the work while paying the normal mortgage payment.

    What he said. It would be madness to overpay a low rate mortgage. Just save in cash ISA's and pay for your conversion outright.
    In case you hadn't already worked it out - the entire global financial system is predicated on the assumption that you're an idiot:cool:
  • Goldiegirl
    Goldiegirl Posts: 8,806 Forumite
    Part of the Furniture 1,000 Posts Rampant Recycler Hung up my suit!
    A mortgage is a loan, not some sort of savings account.

    Part repayments to a mortgage should really only be made if you are sure you don't need the money for any other purpose and want to reduce the mortgage

    Mortgages shouldn't be used to put money in, and then get the money back out again by way of a further advance.

    As the others have said save up for your improvements and get a smaller further advance when you can
    Early retired - 18th December 2014
    If your dreams don't scare you, they're not big enough
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 352.1K Banking & Borrowing
  • 253.6K Reduce Debt & Boost Income
  • 454.2K Spending & Discounts
  • 245.1K Work, Benefits & Business
  • 600.8K Mortgages, Homes & Bills
  • 177.5K Life & Family
  • 258.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.