Loan or Increase Mortgage?

Helter111

I have a decision to make - I need to access approx £20k for home improvements and don't know if I should look to increase my mortgage or get a loan.

A loan gives me a secure monthly payment over a fixed period of time

Increasing the mortgage means I can pay it back over a longer period.

My mortgage deal ends in 11 months time which of course could also be a factor here.

Any advice appreciated.

Tony

MorningcoffeeIV

Depends on what options you have, the rates, the payback periods and any ERC on the mortgage.

Brie

how quickly do you intend to get things done?  I'd think about waiting until renewal time and do it all with the mortgage.  Likely a lower rate than just a loan.

CliveOfIndia

It's important to look at the overall cost.  Usually a mortgage will offer lower rates than an unsecured personal loan - but you'll be paying for it over a much longer period.  So it may actually work out to be considerably more expensive in the long run.

One option to explore may be a 0% purchase credit card.  This does come with a few caveats.  First, you need to be accepted for a card (or combination of cards) with a high enough limit.  Second, can you pay for the work with credit card?  If you're talking about buying a kitchen and bathroom from Wickes and installing it yourself, then no problem.  But if you're talking about getting a builder to do an extension, many small businesses won't accept credit cards.

Third - and perhaps most importantly - will you be able to repay the total balance before the 0% promotional rate expires?  You may be able to shift any remaining balance to another 0% card, but it's extremely unwise to bank on being able to do so.

The other option - would it be feasible to save up and do the work in stages, negating the need for credit at all?