WWYD - Home Improvements

quantumleap

Just wanted some thoughts and outside opinions.

Our 5 year fixed rate mortgage deal has expired. To be honest I made a call 5 years ago that rates would probably go up, so fixed - wrong call! Anyway we have a house worth 140K (recently valued) and a mortgage of 60K, costing £540 P/M.

We have the opportunity to remortgage on another 5 year fix that will either reduce our payments in the region of £100 P/M or we could borrow an additional 15K, increase our remaining term from 13 years to 15 years and pay no more than we are currently paying.

Everything at home is 13 years old now and we would love to take the oppotunity to refresh the kitchen and one of the bathrooms and perhaps give the rest of the house, both inside and out, a bit of a revamp.

So that age old question on these forums, what would you do?

19lottie82

Anyway we have a house worth 140K (recently valued) and a mortgage of 60K, costing £540 P/M.


That seems pretty expensive. Is there a specific reason?

Back to the OP. 13 years isn't that old. Can you not save the £100 a month that you would free up and use that for your home improvements. New bathrooms and kitchens can be done pretty cheaply, if you think outside the box.

You'd save a lot in the long run rather than putting the £ on to your mortgage. Have you checked out how much borrowing another £15k on your mortgage will actually cost you over the term?

tea_lover

quantumleap wrote: »

We have the opportunity to remortgage on another 5 year fix that will either reduce our payments in the region of £100 P/M or we could borrow an additional 15K, increase our remaining term from 13 years to 15 years and pay no more than we are currently paying.

Apart from the thousands in additional interest.

£540 a month on a £60k mortgage seems very high. Personally I'd shop around and get a better deal on that, then save the difference each month. When there's enough there, I'd use the savings for any house improvements needed.

phill99

Problem is is that if you just remortgage on a five year term without the extra money, in 5 years when the next deal is available, your kitchen and bathroom will be 18 years old and in. Need of a major revamp which will cost a lot mire, plus prices will have gone up. So instead of needing £15k, you will need £22k, which will cost a lot more in the long term!

If it costs you no more and you spend the money wisely, then I would suggest going for it!

Edit: having read the above, £540/month on a £60k mortgage is high!

phill99

tea_lover wrote: »

Apart from the thousands in additional interest.

£540 a month on a £60k mortgage seems very high. Personally I'd shop around and get a better deal on that, then save the difference each month. When there's enough there, I'd use the savings for any house improvements needed.

Problem with this argument is that if you reduced your monthly payments by say £120 a month, if you try and save this each month, it will take over 6 yrs to save £10k which is a typical sum to get a kitchen refit. And in 6 yrs, that £10 needs to be £12k.

Plus, its very easy to spend that £120 a month on other stuff and not save it!

quantumleap

phill99 wrote: »

Problem with this argument is that if you reduced your monthly payments by say £120 a month, if you try and save this each month, it will take over 6 yrs to save £10k which is a typical sum to get a kitchen refit. And in 6 yrs, that £10 needs to be £12k.

Plus, its very easy to spend that £120 a month on other stuff and not save it!

This is the way I've been thinking also.

tea_lover

I can see that, but personally I wouldn't be spending money I don't have. I also wouldn't spend that much on a new kitchen!

onomatopoeia99

phill99 wrote: »

Edit: having read the above, £540/month on a £60k mortgage is high!

The remaining term is 13 years (per the original post), meaning it was 18 years originally, so the capital part of the repayments will be higher than for a 25 or 30 year term.

Homeownertobe

phill99 wrote: »

Problem with this argument is that if you reduced your monthly payments by say £120 a month, if you try and save this each month, it will take over 6 yrs to save £10k which is a typical sum to get a kitchen refit. And in 6 yrs, that £10 needs to be £12k.

Plus, its very easy to spend that £120 a month on other stuff and not save it!

It's already going to be much more than £10,000 with added interest. Which you seem to be discounting because it suits your argument.

There are always interest-free offers and kitchen sales available and it's always a bad idea to take on secured debt when you don't have to.

tea_lover

onomatopoeia99 wrote: »

The remaining term is 13 years (per the original post), meaning it was 18 years originally, so the capital part of the repayments will be higher than for a 25 or 30 year term.

Not necessarily (from how I'm reading it - which could be wrong). I read it as the current 5yr fix is ending, not that that is necessarily the first 5yrs of the mortgage.

pickledonionspaceraider

Does the kitchen really need a revamp? 13 years old isn't that old IMO.

I wouldn't borrow more, I would be looking at getting the mortgage down rather than the other way