House extension, savings or remortgage

kittenkicks

Hi all, wondering if you could help.

My husband and I are looking at getting an extension on our 2 bed house, turning it into a 3-bed. It will be a two-storey extension that may cost in the region of £60,000. We have that money currently invested in Vanguard index funds, but we're struggling to work out what the best option would be.

1) Withdraw the money from Vanguard and pay for the extension in cash – The Vanguard index funds make around 10% a year, but there has been the odd year where it's nothing more than 1%, or even a slight loss, so it's not a certain return.

2) Remortgage at a rate of around 1.8% interest and continue to pay double our mortgage minimum payment (approx £1100) a month – We have already paid off nearly 50% of our mortgage, around £80k left to pay... house was bought at 150k, and is currently worth around 180k).

3) A bit of both... 50% of the cash from Vanguard, and 50% from a remortgage.

4) Or a fourth option we haven't thought of yet?

​

Thanks in advance!