Remortgage / Equity advice

Beef

Hi, this is my first post, so be gentle

I luckily purchased my 2 bed semi 2 years ago for £41k just before the market went a bit silly around here. After a 2 year discounted rate, my Mortgage is now a reasonable £240/month with Abbey @ 5.50%.

I owe about £4k in credit cards (most of which was spent furnishing the house 2 years ago) and cannot really afford to pay of much more than the minimum every month (£100). While I realise I was silly and am getting fleeced on interest, it is under control, and the balances are slowly decreasing. Since stumbling across this site, I have obviously applied for a 0% BT card for the short term.

My girlfriend has a £5k loan (Egg) which she is paying off at £250 a month. So between us, we are paying £350 a month on debts.

I paid a premium for my house to have Offroad parking, over the mid link houses on teh street, but now these midlinks are selling for around £90k. I am a realist, and realise that my house is only worth what someone will pay for it, but my house was valued at £65,000 in 2003 by the Council Tax people, so although it may well now be worth more than double what I paid for it (an estate agent friend said £100k) I'll settle for a worst case £20k increase, and say that it will be worth £60k even after a market down turn.

At the moment, I would not be able to afford the £100k mortage to buy my own house, let alone move up the ladder, so we're happy to live here for the next 5-10 years, and count ourselves lucky that I bought when we did.

As we will be here for a while, we want to do some home improvements, which will make our stay here better, and add value to the house when we come to sell. Nothing OTT, just a nice kitchen, bathroom and conservatory, say around £10k of improvements.

As my discounted mortage has finished, and there are better rates to be had, I'm thinking of remortaging to get the best rate and use £10k of equity for the home improvements. I am also considering consolodating our existing £9k of debt into a joint remortage with my girlfriend.

At the moment I owe £39k to Abbey, with 23 years to run for £240 a month.

I have used some online mtg calculators and a joint mortage of £59k over a shorter 20 years works out at £320 a month bewteen us (£160 a month). This would reduce our current monthly payments considerably (£180 less for me, and £90 less for her), with no CC / Loan repayments, £10k of home improvements and 2 years less mortgage (We could even go for a 15 year mtg and still reduce monthly our monthly payments considerably).

I realise that in the longterm this will cost us a fair bit in interest, but we are both in our mid twenties, and the extra money per month, and less worry of debt is worth a lot at this time of our lives. It really does seem appealing. Obviously this could be reviewed every 2 years and we could increase the repayments, or reduce the term as funds allow. Even if one of us lost their job, the other could cover the payments with a little belt tightening.

I'm rambling on now, so I'll get the poimt: We want the home improvements, and I need to consolodate my CC debt, so is this the best way, or would I be better off with a non secured loan of £15k over 5 years, and her to keep paying her loan. That would probably be cheaper in the long run, but we'd both be skint every month when we should be enjoying ourselves before the inevitable kids appear in a few years

Mortgageman

long term debt (i.e. increasing the mortgage) will be cheaper in the short term (i.e. your monthly cash surpless will be higher) but more expensive in the long term (you will pay more interest over the term)