Financing DIY

OK, not strictly on topic, but something that I'm sure more than a few people here have dealt with.

I'm planning some fairly major work on my house, and I'm trying to work out the best way to finance it. As I see it, I have two options.

1) Take out a loan/mortgage against the equity in the house. 2) Take out a personal loan.

I'm lucky in that the equity I have is substantially more than the amount I'm planning on spending, and my current mortgage plus a possible second one would still come in less than the maximum I could get on a new mortgage. My bank has also offered a loan at a very good rate that would cover the amount I'm planning on spending. Now obviously a mortgage would offer a better rate, but the bank loan would be fixed (which I like).

Anyway, which option do most people prefer/makes better sense? Any big reason not to do it a particular way?

Reply to
Slugsie
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In message , Slugsie wrote

Make sure that the rate offered on the mortgage is actually the same as you may be paying at the moment and not at a higher rate. Also factor in any 'valuation' or 'arrangement' fees.

Reply to
Alan

In message , Slugsie writes

You can still fix the loan with a mortgage as well.

The best option IMO is the one which is cheapest, which will probably be a re-mortagage at least in terms of actual interest rate and repayments. For smaller amounts say

Reply to
chris French

Hmm, I forgot about extra fees involved with a mortgage, thanks.

Reply to
Slugsie

Thanks for the info.

Reply to
Slugsie

I suppose the other obvious ones are to think about:

Term. An additional mortgage does not have to run for the same period as the main one necessarily. If the amount is relatively small compared with the overall, then rather than going for 20 years or more, then 5-10 will mean that although the monthly fee is higher, the total amount of interest paid will be considerably less.

Repayment vehicle. If you go for an interest only mortgage then consider this one carefully, research and take advice. Depending on your situation, ISAs, index tracker funds etc. can be useful things to consider. Don't forget tax implications.

.andy

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Reply to
Andy Hall

Best rate is all you care about. Probably a second mortgage.

Reply to
The Natural Philosopher

Re-mortgage with a Virgin One account. You set the upper borrowing limit (within the value of the house). Pay for things as and when you need them (rather than borrowing a lump sum and paying interest on the whole amount before you've actually spent it all.

Alternatively put everything on the credit card then transfer to one which gives 6 months interest free for balance transfers. Then take out the loan to pay it off if you haven't already (or transfer to another card if they'll let you).

Reply to
Andrew

You have to figure in how many years you have left on your mortgage.

If you can get a loan at 6.9%, your 4% re-mortgage may look more tempting, unless you have 20 years left on it.

Bob

Reply to
Bob Smith

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