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

Q We now have a home loan of £122,000 and will need to complete some dwelling renovations costing £25,000. We can find the money for to preserve about £500 a month to place towards the house renovations but it would consider us a long time to preserve. Would it be truly worth overpaying the home finance loan and then borrowing the amount we want? Our mounted amount ends in January 2024.

A You’ve dropped me. I really don’t recognize why you would overpay your mortgage loan only to borrow it again at some stage in the upcoming. I’m also a minimal concerned that simply because you have a preset-price offer there will be a restrict – commonly 10% of the outstanding loan – on how significantly you can overpay. In your scenario that suggests you could be restricted to overpaying £12,200 this 12 months but as which is a little bit extra than twice the £500 a thirty day period you have going spare, you are unlikely to breach your lender’s limits. But as I claimed just before, why would you want to overpay unless it is because your current home loan represents the utmost your loan company is organized to lend you.

It is also unclear when you are organizing to have the renovations finished. If it is as before long as doable, it may possibly be an strategy to question your loan provider if it is organized to raise your property finance loan by the £25,000 you need to have to fork out for the work. If you can wait around a although – which in the latest house loan local weather I recommend is the way to go – you could look at waiting until your mounted price will come to an conclusion and including an excess £25,000 when you remortgage to a new offer.

The alternative is to have a search at the individual financial loans segment at exactly where you can enter the sum you want to borrow and for how prolonged. For a £25,000 personal loan in excess of five several years (60 months) you can assume to fork out again a fastened amount of concerning £450 and £500 a month.

Want skilled enable finding your new mortgage loan? Use our on the net instrument to look for 1000’s of offers from a lot more than 80 lenders with the Guardian Home loan Assistance, run by L&C.

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