loan vs remortgage

margerine88

We have a mortgage which is 1% above the BoE base rate. Great! Love such a low rate. We want to borrow £25,000 to extend our home. Our existing mortgage lender says we can have it at 5.49%. I read Martin's mortgage guide and he mentions in there that "10% for 5 years is cheaper than 5% for 20 years". Our lender reckons £165 p/m on top of what we are now paying. Loans would start at around £500 p/m. Quite significant difference. Any advice anyone?

Thrugelmir

The longer the term of the loan the more interest you'll pay.

So lower interest over a longer period doesn't mean less interest to pay.

Nothing to stop you borrowing from your existing lender over a shorter time frame.

Wh05apk

Presumably you will keep your existing mortgage at BR+ 1%?

You need to look at the overall cost, compared against re-mortgaging to get the full amount at a lower rate.