Remortgage for 5 or 10 years fixed?

avantra

Hi,

I need some advice on where to go forward.

I'll list our situation below:

We need to build an office extension for my wife and me to work from home at least four days a week.

Our monthly joint annual net income is around £70000, and our total expenditure is around £2800/month.

We have a fixed five-year 1.84% mortgage with FD with a 58k balance ending in September 2022 (but we can lock a new rate in June 2022) and around 85k savings with Chase plus another 20k in S&S ISA's.

The quotes on the extension are between 60k to 88k, so we look at the max for this query.

We are thinking of financing the extension with 50k of our own savings and borrowing the rest against a new mortgage deal we are allowed to take comes September.

My query is:

1. Is the idea of using only 50k sensible? (we want to have the rest of the savings and investments to top up our pensions or keep back for a rainy day).
2. Considering we are entering a new inflationary age, and we wouldn't want a mortgage longer than ten years should we look at five years fixed with our lender (at 2.14%) or look into ten years fixed mortgage which FD is not currently providing but still available from the like of Barclays at 2.35%?

getmore4less

My view on major projects over borrow so you don't run out of money.

Can always overpay if you don't use it but getting more borrowing is an big unknown and can mess up a project.

K_S

@avantra With regard to the level of borrowing required to do the necessary works, I would echo the poster above.

It's quite common for clients to go over budget and end up using a lot of short term debt (loan, cc, etc) to plug the hole and then struggle to remortgage due to the level of back-ground debt. A bit of surplus cash can always be ploughed back in to the mortgage as an overpayment or employed elsewhere if that's what you prefer.

avantra

Hi,

So if I understand you correctly, as part of the re mortgage exercise, borrow the existing balance(58k) + the cost of the extension, ie take a new mortgage for 146k, then use the savings to overpay and in essence pay the extension element off once the project is completed and all costs are known.