Home Improvement: Remortgage Or Personal Loan?

[Addidaz]

Hi All,

I want to get a new kitchen and bathroom installed in two bedroom flat. I have a mortgage of 132K which I took out in July 2010.

I'm thinking of either getting the 5K I need to do bathroom and kitchen via a personal loan (high interest rate and paid back quicker) or remortgage (lower interest rate, paid back longer). I'm not sure which is the best option economically. Getting a loan would be expensive in the short term but I would pay back less in total including interest. However, remortgaging would be easier for me to handle but that 5K is over 25 years which means I pay back more.

Which is the best way to go in these circumstances and would I be able to remortgage again if I choose the remortage option?

Thanks,

A

[arrgee1991]

Hi All,

I want to get a new kitchen and bathroom installed in two bedroom flat. I have a mortgage of 132K which I took out in July 2010.

I'm thinking of either getting the 5K I need to do bathroom and kitchen via a personal loan (high interest rate and paid back quicker) or remortgage (lower interest rate, paid back longer). I'm not sure which is the best option economically. Getting a loan would be expensive in the short term but I would pay back less in total including interest. However, remortgaging would be easier for me to handle but that 5K is over 25 years which means I pay back more.

Which is the best way to go in these circumstances and would I be able to remortgage again if I choose the remortage option?

Thanks,

A

Remortgage and overpay. Most mortgages allow you to overpay by £500/month, so you would end up paying less.

[tim123]

Remortgage and overpay. Most mortgages allow you to overpay by £500/month, so you would end up paying less.

I'm not convinced by this strategy.

Surely to remortgage there will be adminstration costs to pay, which for a 5k increase in the loan will be significant.

tim

[PbroAgent]

Just a silly old fashioned thought , but why not save the money and do the improvements once you can actually afford them? That way you will actually EARN interest on the money and it will cost you far less.

[Bankside]

Just a silly old fashioned thought , but why not save the money and do the improvements once you can actually afford them? That way you will actually EARN interest on the money and it will cost you far less.

+1

Sometimes the old ways are still the best ways

[longtomsilver]

Just a silly old fashioned thought , but why not save the money and do the improvements once you can actually afford them? That way you will actually EARN interest on the money and it will cost you far less.

+2

[Addidaz]

Remortgage and overpay. Most mortgages allow you to overpay by £500/month, so you would end up paying less.

I like this idea very much. Provided I over pay by a smilar amount I would take me to pay off the loan in a reasonable time. I think I should be no worse off. How many times can I remortage?

[Addidaz]

I'm not convinced by this strategy.

Surely to remortgage there will be adminstration costs to pay, which for a 5k increase in the loan will be significant.

tim

Hmmm. Something to think about.. There must be a way of calculating the optimum decision of remortgaging vs loan. My gut feeling is that remortgaging and overpaying is the most optimum!

There must be an algebra formula somewhere to calculate this.

[Addidaz]

Just a silly old fashioned thought , but why not save the money and do the improvements once you can actually afford them? That way you will actually EARN interest on the money and it will cost you far less.

Hmmm. Not sure about this one. The kitchen and bathroom will be an investment. The 5K put into this (even with the interest I have to pay ont it) I'm sure will make a greater return than leaving that 5K in the bank. It's simply A vs B. Unless anyone disagrees?

It would cost me far less to save but I'm buying time by paying interest right? Kitchen and bathroom now or in 1/2 years time?

[arrgee1991]

I like this idea very much. Provided I over pay by a smilar amount I would take me to pay off the loan in a reasonable time. I think I should be no worse off. How many times can I remortage?

Contact your mortgage provider and they will tell you if there are any administration costs involved and how often you can remortgage.

If you are on the standard variable rate and have enough equity then it is unlikely there will be any fee, but ask your provider for a quotation before you act.