Should we overpay the mortgage and borrow money for house renovations? | Mortgages
Q We at present have a house loan of £122,000 and require to full some house renovations costing £25,000. We can afford to conserve about £500 a thirty day period to place to the property renovations but it would choose us a long time to preserve. Would it be truly worth overpaying the property finance loan and then borrowing the sum we require? Our mounted price ends in January 2024.
AW
A You’ve lost me. I never realize why you would overpay your mortgage loan only to borrow it again at some position in the potential. I’m also a very little nervous that for the reason that you have a preset-level offer there will be a limit – generally 10% of the fantastic bank loan – on how much you can overpay. In your scenario that signifies you could be limited to overpaying £12,200 this 12 months but as which is a little bit extra than two times the £500 a month you have going spare, you are not likely to breach your lender’s limitations. But as I explained prior to, why would you want to overpay unless it is simply because your existing house loan represents the utmost your loan company is well prepared to lend you.
It is also unclear when you are preparing to have the renovations performed. If it is as soon as feasible, it may be an thought to ask your loan company if it is geared up to increase your house loan by the £25,000 you require to pay back for the work. If you can hold out a whilst – which in the current home finance loan local weather I advise is the way to go – you could take into consideration waiting until eventually your preset amount arrives to an conclusion and which includes an additional £25,000 when you remortgage to a new offer.
The choice is to have a seem at the personal financial loans section at Moneyfacts.co.united kingdom in which you can enter the volume you want to borrow and for how very long. For a £25,000 financial loan in excess of five years (60 months) you can hope to pay back back again a set amount of concerning £450 and £500 a thirty day period.
