Borrowing more on mortgage house improvements

trance14

Morning everyone. 
Just a quick one, building a single story extension on my house, just wanting to know if the better option is to borrow the money on my mortgage or use around 80% of my savings which are in stocks and shares and have earned 20% in 6 months.
House is worth around 115k. I have 35k equity and have 21 years remaining term paying £383 a month. Bank have said I can have £13k for an extra 70£ a month for the remaining.
I was overpaying my mortgage anyway but now I have stopped as I am getting into shares. 
I am 28, no kids, on £35k a year.
What's the best option for me? Obviously at the minute I'm swinging towards accepting the bank's money due to the uplift on my savings. 

Thank you all. 

moxxey

trance14 said:

Morning everyone. 
Just a quick one, building a single story extension on my house, just wanting to know if the better option is to borrow the money on my mortgage or use around 80% of my savings which are in stocks and shares and have earned 20% in 6 months.
House is worth around 115k. I have 35k equity and have 21 years remaining term paying £383 a month. Bank have said I can have £13k for an extra 70£ a month for the remaining.
I was overpaying my mortgage anyway but now I have stopped as I am getting into shares. 
I am 28, no kids, on £35k a year.
What's the best option for me? Obviously at the minute I'm swinging towards accepting the bank's money due to the uplift on my savings. 

Thank you all. 

Correct me if I'm wrong, but you'd earn far more paying the mortgage off earlier than you would from shares, as a rule? Why would you stop to take a risk on shares? I'd only put money in shares if you have a lot of spare money to invest. 

Also, why borrow more if you have savings? Just use the savings. If you borrow more, not only does the monthly repayment go up, but you add more interest to the mortgage, plus it means you need to claw back more money if/when you sell the house. If it's worth £115K now and you take out a £13K mortgage, that's another £13K of value you'll need to make sure you add to the house.

trance14

moxxey said:

trance14 said:

Morning everyone. 
Just a quick one, building a single story extension on my house, just wanting to know if the better option is to borrow the money on my mortgage or use around 80% of my savings which are in stocks and shares and have earned 20% in 6 months.
House is worth around 115k. I have 35k equity and have 21 years remaining term paying £383 a month. Bank have said I can have £13k for an extra 70£ a month for the remaining.
I was overpaying my mortgage anyway but now I have stopped as I am getting into shares. 
I am 28, no kids, on £35k a year.
What's the best option for me? Obviously at the minute I'm swinging towards accepting the bank's money due to the uplift on my savings. 

Thank you all. 

Correct me if I'm wrong, but you'd earn far more paying the mortgage off earlier than you would from shares, as a rule? Why would you stop to take a risk on shares? I'd only put money in shares if you have a lot of spare money to invest. 

Also, why borrow more if you have savings? Just use the savings. If you borrow more, not only does the monthly repayment go up, but you add more interest to the mortgage, plus it means you need to claw back more money if/when you sell the house. If it's worth £115K now and you take out a £13K mortgage, that's another £13K of value you'll need to make sure you add to the house.

Thanks I get where you are coming from. My thinking was because my savings are 'currently' making me 25% I would benefit more by leaving them how they are and letting the bank give me the money on my existing 1.8% mortgage. I see your point is that in the long run it makes more sense to use the stocks and shares money i currently have? Thanks 

grumiofoundation

moxxey said:

trance14 said:

Morning everyone. 
Just a quick one, building a single story extension on my house, just wanting to know if the better option is to borrow the money on my mortgage or use around 80% of my savings which are in stocks and shares and have earned 20% in 6 months.
House is worth around 115k. I have 35k equity and have 21 years remaining term paying £383 a month. Bank have said I can have £13k for an extra 70£ a month for the remaining.
I was overpaying my mortgage anyway but now I have stopped as I am getting into shares. 
I am 28, no kids, on £35k a year.
What's the best option for me? Obviously at the minute I'm swinging towards accepting the bank's money due to the uplift on my savings. 

Thank you all. 

Correct me if I'm wrong, but you'd earn far more paying the mortgage off earlier than you would from shares, as a rule? Why would you stop to take a risk on shares? I'd only put money in shares if you have a lot of spare money to invest. 

You are (most likely) wrong. Over the long-term investing in stocks and shares (assuming diversified portfolio of investments not all in a couple of companies or in exotic ventures) is likely to beat overpaying the mortgage (returns on S and S outweighing mortgage interest).

However investing obviously comes with associated risk.

trance14 said:

moxxey said:

trance14 said:

Morning everyone. 
Just a quick one, building a single story extension on my house, just wanting to know if the better option is to borrow the money on my mortgage or use around 80% of my savings which are in stocks and shares and have earned 20% in 6 months.
House is worth around 115k. I have 35k equity and have 21 years remaining term paying £383 a month. Bank have said I can have £13k for an extra 70£ a month for the remaining.
I was overpaying my mortgage anyway but now I have stopped as I am getting into shares. 
I am 28, no kids, on £35k a year.
What's the best option for me? Obviously at the minute I'm swinging towards accepting the bank's money due to the uplift on my savings. 

Thank you all. 

Correct me if I'm wrong, but you'd earn far more paying the mortgage off earlier than you would from shares, as a rule? Why would you stop to take a risk on shares? I'd only put money in shares if you have a lot of spare money to invest. 

Also, why borrow more if you have savings? Just use the savings. If you borrow more, not only does the monthly repayment go up, but you add more interest to the mortgage, plus it means you need to claw back more money if/when you sell the house. If it's worth £115K now and you take out a £13K mortgage, that's another £13K of value you'll need to make sure you add to the house.

Thanks I get where you are coming from. My thinking was because my savings are 'currently' making me 25% I would benefit more by leaving them how they are and letting the bank give me the money on my existing 1.8% mortgage. I see your point is that in the long run it makes more sense to use the stocks and shares money i currently have? Thanks 

As above in the long run it (most likely) makes sense to invest as opposed to pay off a mortgage.

Can apply same logic to borrowing more (assuming the money will be spent either way - if that makes sense?). 

On a semantic point money invested isn't really 'savings' any more - your 25% gains could easily be wiped out and more.