Extra borrowing on mortgage advice 21 November 2022 at 8:38AM in Mortgages & endowments 2 replies 233 views

matt1987

So the time has come where my house needs some tlc and to finance it I need to borrow on the mortgage.

I know it’s the wrong time to be doing this with borrowing going up etc, however the quotes I am getting add up to around £50k which includes new bathroom and kitchen, all of which will be taken out on our mortgage. I then have £12k cash set aside of my own money should anything go wrong.

Over the weekend I went to view a kitchen which we like - and it came out around £5k more than what I’d like to pay - it’s solid wood so would last a lot longer, however they also offer 5 year interest free on the kitchen itself.

Now, I tried to work out that if I didn’t borrow as much on my mortgage (let’s say £10k less which was my budget for the kitchen originally) then surely my payments in the long term over that 22 year period would be lower due to the interest in the £10k?

The kitchen on 5 year interest free would be £250 a month however taking £10k less out the mortgage would only bring it down by £50 a month on an initial 2 year term, but then I suppose I’d be paying much more in the long run?

What’s best to do in this situation? Take out the full £50k on mortgage or take out less on mortgage and finance the kitchen through interest free? For what it’s worth I can afford the extra mortgage payments and also £250 a month for the kitchen over 5 years - just trying to figure out how best to do this in the current climate!

Thanks! 

jimjames

Kitchen on interest free and lower mortgage advance would be cheapest as you're not borrowing as much on interest paying chunk. 

matt1987

Thank you - for some reason I struggle to get my head around it! £10k I suppose is quite a large chunk of the advance which I’d be paying interest on so it makes sense!