Add to Mortgage or Loan?

anotheruser

I guess there isn't a general rule of thumb with this but wondering what's a better avenue to explore?

We want to borrow between £10,000 and £15,000.

Mortgage is at 2.6%, £110,000 remaining, £625 a month, 19 years left.

We could take out up to £14,000 and either pay £710 a month or add some years. Likely to do the latter.

Done a quiz thing on MSE, which says MBNA could lend us £10,000 at 3.4% over 5 years, which means £181 a month and £875 in interest.

We are literally about to remortgage - it's all set up, just waiting for the time the old mortgage runs out.

Haven't explored credit cards, which at 0% seem attractive but we're already paying one off, which has a few thousand on it for previous health treatment (had to go private) so don't want to complicate things by having another one or two.
Although it would be easy once set up with SOs, we'd then have to faff about 2 years later transferring the debt to another credit card, which may not be 0% then anyway.

Any advice on what would be best to do?

[Deleted User]

You need to consider a few factors - what the money is for (so what payment options you may have), your planned repayment time and the various rates you could get on the different options. 0% cards is one way to go (if you can get them) but leaves you at risk of dramatic rate increases.

Another way of looking at it is how long would it take you to save that amount (bearing in mind existing debts) and use that as a basis for your calculations. 

Scorpio33

On those figures, the loan would be cheaper than mortgage due to you paying it off over a shorter period of time.

However, if you could afford to pay more each month, then it would be worth checking if you can overpay your (new) mortgage deal. If you could, it would be cheaper getting the mortgage and overpaying, given the cheaper interest rates.

With the credit cards, the issue would be:

1) There is no guarantee you would get the credit limit you need for your spend
2) You will get charged interest if you don't pay it back within the interest free period
3) You have to be very disciplined with yourself not to use the credit card for any other spends

So if it was me, I would stick with the mortgage and look into overpaying. But its just my opinion.