Re-mortgaging and releasing equity - save or pay off debt

purplebiro2

Asking this question in the full knowledge that I may not be giving all the details needed for an answer but will happily reply to comments with questions on anything I have missed.

Due to remortgage in June 2026. House is worth approx £400k and will have a mortgage of about £190k left by then.

Our intention is to apply for additional borrowing (£50k) at the point of remortgage to use to build an extension.

As of right now we have approx £17k in savings (recently acquired through an inheritance and family gift) and £25k in debts (two loans, one of £11k for previous work on the home and one of £14k for private medical care). We have no other major expenses other than the expected bills etc.

My question is this: in order to put ourselves in the best position to get the additional borrowing we want when we remortgage would it be better for us to:

1. Pay off one of the debts and therefore have lower outgoings.
2. Keep the savings (and accrue more - potentially taking it up to £20k) and ask for less additional borrowing.

TIA

Hoenir

Pay off the expensive debt. Anything could yet happen in the two plus years ahead. 

penners324

The short term debts need prioritising above saving.

Are you getting more in interest on savings than on the loans? If not then use the savings to pay the loans down.

Having those loans will impact the amount you can mortgage as well

purplebiro2

OK, thanks everyone - exactly the clear answers I needed!