Is this the best way to do this?

rach83

I currently have a £6750 loan (this is the settlement figure) with HSBC for my car. The APR is 5.9% over 42 months. I have 33 months remaining and it costs me £211 per month.

I want/need a new kitchen. Santander have offered me a £15k loan at 4.5% this will cost me £279 over 60 months. I will pay the car loan I currently have off and use the remainder to do the kitchen. I have about another £1000 to put towards the kitchen from savings.

I looked into extending my mortgage but the bank wanted to charge nearly 7% on the additional borrowing and over the whole 33 year term left on my mortgage it would have cost me about £55 extra per month. Also it will mess up my LTV when I come to remortgage in c. 4 years time.

Do you think the 4.5% loan route is the best option for me?

IainHL

From what you have posted it certainly looks to me to be a favourable approach for what you want to do.

wlasikiewicz

If you can pay off one loan with the other and still have money over to complete your project then it looks good to me. Just make 100% sure that you can cover your monthly costs.

Gaz83

Remember that when applying for the second loan Santander will assume that you won't use it to pay the first one off, and would then have nearly £23k in credit. Is it a definite you'll be accepted for the second loan?

rach83

I told Santander that I had the other loan and that it wasn't my intention to pay the car off (I will) this was taken into consideration when giving me the £15k loan. I have the paperwork from Santander to sign and return to them and I have the 4.5% rate for definite. Whilst I am dragging the term out by 2 years the cost is another £70 per month. Up until v recently I have been paying £80 per month to hitachi capital for my bathroom (0% for 12 months) which is all paid for now. Need to move on to the next project.

somethingcorporate

Sounds like a winner. The only way I think you could possibly do it better is paying for the kitchen on 0% CC but unless you have it available it's unlikely you'll get enough of a balance on first application.

Clive_Woody

Do shop around for kitchens as you really don't need to pay as much as £10k for a new kitchen. The sheds (B&Q, Homebase etc) will charge a lot for fitting as this is contracted out so they are taking a big cut.

Look for a good local kitchen fitter with a Howdens account or something similar and you should be able to save a few quid and maybe make an overpayment on the loan to shorten the term of the loan,