Should we overpay the mortgage and borrow money for house renovations? | Mortgages

Q We presently have a mortgage loan of £122,000 and require to comprehensive some house renovations costing £25,000. We can afford to pay for to conserve about £500 a month to place toward the dwelling renovations but it would choose us many years to preserve. Would it be truly worth overpaying the home loan and then borrowing the volume we require? Our mounted rate finishes in January 2024.

A You have misplaced me. I do not fully grasp why you would overpay your property finance loan only to borrow it again at some position in the potential. I’m also a very little worried that for the reason that you have a mounted-charge offer there will be a limit – commonly 10% of the outstanding mortgage – on how much you can overpay. In your scenario that suggests you could be constrained to overpaying £12,200 this calendar year but as which is a little bit much more than twice the £500 a thirty day period you have likely spare, you are unlikely to breach your lender’s boundaries. But as I claimed ahead of, why would you want to overpay except if it’s due to the fact your recent mortgage loan represents the highest your lender is well prepared to lend you.

It is also unclear when you are arranging to have the renovations accomplished. If it’s as before long as feasible, it could be an notion to request your lender if it is ready to maximize your property finance loan by the £25,000 you will need to pay for the operate. If you can wait a while – which in the latest mortgage loan weather I advise is the way to go – you could take into consideration waiting around until eventually your fixed price comes to an conclusion and together with an more £25,000 when you remortgage to a new offer.

The different is to have a seem at the personal loans part at the place you can enter the quantity you want to borrow and for how lengthy. For a £25,000 personal loan above five several years (60 months) you can be expecting to shell out back again a preset volume of between £450 and £500 a thirty day period.

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