Remortgage or personal loan

mrsbudget

Hi,

I wonder if you could help me, our roof is needing done and the quote we have are ranging from £10,000 to £15,000. Im just wondering if we get the £10,000 quote, would it be better to take only a personal loan than a remortgage? I thought, for a £10,000 to add in a mortgage will have too much interest in the long run but I dont know really know if my idea is right.

Could anyone advise me pls..thnks.

Mr_helpful

mrsbudget wrote: »

Hi,

I wonder if you could help me, our roof is needing done and the quote we have are ranging from £10,000 to £15,000. Im just wondering if we get the £10,000 quote, would it be better to take only a personal loan than a remortgage? I thought, for a £10,000 to add in a mortgage will have too much interest in the long run but I dont know really know if my idea is right.

Could anyone advise me pls..thnks.

It depends how long your mortgage has to run. On the face of it a remortgage would be lower interest but as you say you may be paying for the loan on the mortgage for a lot longer making the remortgage route more expensive.
If you are paying the lenders standard variable rate at present it may pary you to remortgae anyway.
You need to run the figures past a no fees whole of market broker.

mrsbudget

hi, actually, we have a 17 yrs on our mortgage at the moment and Im thinking if I will remortgage, I still want same number of years. We have an £80,000 mortgage at the moment and we need £10,000 for the roof. There are still so many things to be done in the house like the basement and inside/outside paintings and my husband is suggesting why not just borrow a big amount to add to the mortgage then everything is done. So might have to borrow around up to £30,000 to cover the basement expence and roof.

Our house as compared to next door which was only purchased 2 yrs ago is worth £200,000 (that was the price our neighbour paid for it) so, do you think I should go on and borrow the big sum or just borrow the amount for the roof first. If for the roof first, would it be a personal or remortgage???

Bismarck

can you afford to add 30K onto your mortgage and keep it within the 17 year term, without seriously affecting your lifestyle?

mrsbudget

it will i think really seriously affect our family lifestyle but the reason i would like to pay it in same number of years is that i want to be out of mortgage in 17 yrs..

Oh!! I dont know!! Pls help!!

TEDDYRUKSPIN

You mean further advance...

Anyway, simple answer I always state is....

if it stays with the house, use the secured mortgage basis than a personal loan. At the end of the day you can't take the roof when you move.

PasturesNew

A loan is likely to be at a higher rate than a mortgage.
So a mortgage seems most sensible.
Where it isn't sensible is when you're spreading the loan across the length of the mortgage - because overall you pay more back.

What I would do is one of the following:
1] Remortgage over 15-17 years. The cost of this will be cheaper than paying mortgage + personal loan
2] Remortgage, but make sure you can make overpayments on that; then find out the figures for how much the personal loan WOULD have cost you (presumably over less years) and overpay the mortgage as if you had the loan each month, thus effectively keeping the loan length the same, reducing the interest you'd have paid on it and giving you flexibility (if a crisis occurs) to stop the overpayments.

Another thing to check is the total cost of the loan, compared to the total cost of the remortgage.

PasturesNew

TEDDYRUKSPIN wrote: »

you can't take the roof when you move.

You'd be surprised ... I've seen some right dodgy practices being asked about in these forums!

mrsbudget

Thanks very much to you all,,,Teddy, that's right, I think I have to thnk that way from now,,if thing has to stay, remortgage,,good idea,,

And to PasturesNew,,,thnks I do appreciate your advise too. sometimes, ideas are also in my mind, I just need some people to tell me same thing to agree to it,,

Thank you people,,next move,,look for a good rate out there for remortgaging, any advise again?

Ta,,

MarkyMarkD

Yep, I've got some advice. There's a button on your keyboard next to the comma, called a full stop. When you feel the urge to type

,,,

why not try it out, or just use one comma if a comma is what you need? And it's advice not advise when it's a noun, rather than a verb.

Anyway, now I've got that off my chest, back to the topic.

The comments so far have missed out some key points.

1. Are you tied in on your existing mortgage. If you are, then you cannot remortgage (or it would be mad to do so) so see step 2. If you are not, then you can consider remortgaging, but it still may not be worth doing so because rates have been going up generally.

2. If you are tied into your existing lender, your realistic choice is between taking a further loan (probably at their standard variable rate) or taking a personal loan. For the sort of amount you are talking about, I doubt you can afford the payments on a personal loan - typically over 5 years maximum - but if you can, and the rate is lower than the further loan, then obviously that's the way to go. If you cannot afford the payments on a personal loan, then there is no sensible choice other than a further loan.

3. Once you've made the decision to take a further loan, you should set the term of that further loan as low as you can possibly manage without over-stretching yourself. And you should put any future overpayments into that, rather than your main mortgage, as (1) it's unlikely to incur penalties and (2) the rate is likely to be higher.

I hope that helps.