Bank loan or add onto mortgage

giddo

hi

im not to good on the financial front so i thought id come on here for any advice you could give.
i want to upgrade our bathroom and ensuite but its looking in the £8000-£10000 area,me and my partner work but it would take a while to save that kind of money so we were thinking of adding it to our mortgage which at the moment is a repayment one.
But me being me have started have doubts about it being the right thing to do,so would a bank loan be a better bet?

cheers.

Apples2

Depends what repayments you can afford.

Remortgaging costs less each month but goes on for a very long time so work out how much it will cost overall.

A Loan costs more each month but costs significantly less overall.

If it were me, I would use a loan and but you could remortgage and overpay by the amount a loan would have cost.

giddo

ive got about 16 years left on my mortgage at £79000,think it puts £78 a month on it if i add £10000,whereas the bank loan is £180 over 5 years.

Gaz83

giddo wrote: »

ive got about 16 years left on my mortgage at £79000,think it puts £78 a month on it if i add £10000,whereas the bank loan is £180 over 5 years.

It's basic arithmetic then.

78 x 12 x 16 = £14,976
180 x 12 x 5 = £10,800

Bank loan is £4,176 cheaper.

giddo

so thats all its down to, which is the cheapest?.Theres no hidden reason why one would be better than the other?

Pixie5740

Pretty much. Although I tend to favour unsecured debt over secured debt. If something unexpected happens, as can happen in life, and you can't make the repayments, it's less bad to default on unsecured debt than secured debt.

Thrugelmir

Gaz83 wrote: »

It's basic arithmetic then.

78 x 12 x 16 = £14,976
180 x 12 x 5 = £10,800

Bank loan is £4,176 cheaper.

The 2 aren't comparable. Why not repay the mortgage over 5 years?

Southend1

It would be cheaper and ultimately more satisfying to save up and upgrade the bathroom when you can afford it.

Paul_the_Painter

The cheapest way to do it is to add to the mortgage (usually a lower interest rate) and then over pay your mortgage each month/year so that you get the advantage of a lower interest rate, and a shorter term.
However this requires discipline.
If you feel that there is even a chance that this will not happen take the loan!
If you have a great credit rating and a history of having credit cards with big limits, the very cheapest way to do it is to take out a 0% for 36 month credit card and pay that off before the end of the interest free period. This is not likely unless you already have a card or 2 that allow this with big limits already in place. (Also requires discipline as the minimum payment will be much less than you to pay it off in time)

Gaz83

Thrugelmir wrote: »

The 2 aren't comparable. Why not repay the mortgage over 5 years?

As a ballpark figure, it's a decent enough comparison.

giddo

thanks everyone.not sure what ill do yet.but i think a loan may be the answer.
i dont fancy paying for something over 16 years then deciding to change it again or move home.