Loan or Remortgage for home imporovement?

solorize

Hi,  I am looking for some advice on which is the best way to finance 
an approx: £15k home improvement. 

In general, is it better to take out a new separate loan for say 3 years
or re-mortgage and add the £15k onto the mortgage?

I understand that probably a mortgage rate may be cheaper than
a new loan, but I am not sure if it would cost me more in the long run.

If I did re-mortgage and then say paid the similar monthly amount (as a new loan
would have been), off as an overpayment for the same 3 years (even though
say my mortgage term would be 10years), would this be advisable and not
cost me more on my mortgage in the long term?

F.Y.I
My current mortgage deal expires at the end of 2024 so I would not
be in a position to re-mortgage until then. But with a new loan I would
be able to get access to the money before that. But I am not sure
if it would be more beneficial to wait and re-mortgage if it is the 
cheaper option, hence this post. 

Thanks in advance.

macman

You need to simply do the maths. Lower interest rate on the remortgage vs a longer repayment term than a personal loan.
There's no general rule, it will depend on the rates and the terms.

solorize

Thanks for your reply. I will have a look and see what is available.

Herzlos

If your current deal expires next year, then be prepared for a pretty substantial bump to your mortgage rate and payments, as they went up by about 3 percentage points across the board in October 2022. There may also be a tightening of lending criteria / stress testing so without a lot of equity you may not get a great remortgage deal.

But beyond that, you just want to take whatever gives you the lowest APR

Fighter1986

Keep in mind you can remortgage to release equity and overpay (within the overpayment allowance on your mortgage product, usually 10% of the balance each year so e.g. if you owed £200,000 you could overpay by £20,000 in that year without incurring an early repayment charge).

This will allow you to take advantage of the lower APR of a mortgage, whilst also having the flexibility to repay it more quickly with overpayments to reduce the overall interest you pay.

Most lenders will allow a drawdown of equity (up to a given LTV) without sacrificing your current deal, the additional lending would be at a new fixed rate based on their current portfolio.