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

Q We at the moment have a property finance loan of £122,000 and require to entire some house renovations costing £25,000. We can manage to save about £500 a thirty day period to put towards the property renovations but it would consider us decades to conserve. Would it be well worth overpaying the house loan and then borrowing the sum we need to have? Our set amount finishes in January 2024.
AW

A You’ve dropped me. I really don’t understand why you would overpay your home finance loan only to borrow it back again at some place in the upcoming. I’m also a small apprehensive that simply because you have a fixed-price offer there will be a limit – normally 10% of the remarkable bank loan – on how substantially you can overpay. In your situation that implies you could be constrained to overpaying £12,200 this yr but as that’s a little bit much more than two times the £500 a thirty day period you have heading spare, you are not likely to breach your lender’s boundaries. But as I reported just before, why would you want to overpay until it’s due to the fact your present house loan represents the maximum your financial institution is organized to lend you.

It is also unclear when you are setting up to have the renovations performed. If it is as before long as probable, it might be an thought to inquire your loan company if it is well prepared to increase your mortgage loan by the £25,000 you have to have to pay out for the work. If you can wait around a when – which in the latest property finance loan climate I propose is the way to go – you could consider ready until your mounted level will come to an finish and together with an extra £25,000 when you remortgage to a new deal.

The choice is to have a appear at the personal financial loans area at Moneyfacts.co.uk the place you can enter the amount you want to borrow and for how very long. For a £25,000 bank loan more than 5 yrs (60 months) you can be expecting to pay back again a fastened amount of money of between £450 and £500 a thirty day period.

Want skilled aid getting your new home loan? Use our on-line resource to lookup 1000’s of deals from much more than 80 loan providers with the Guardian House loan Service, powered by L&C.

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