Extend Mortgage

[Satonloo]

We have lived in our house for 3 years. It is a 1970s detached house which is in considerable need of updating. We dont have the money for this and my husband is awful at anything that is remotely DIY.
I think our only option is to extend the mortgage. We bought it fairly cheap as it needs updating and it had tenants in. My husband is against extending the mortgage but it is making me miserable living in a house that needs so much work needs doing.

In this climate would you extend your mortgage?

I would not

Can you afford it?

What would you be doing? Increase the monthly repayments or extending the years.

It would be better to save up the money you would use on the increased repayments to do pay for it.

How are your DIY skills?

If you can afford the repayments, sure.

However, do look into whether other means of funding would be better - shorter term loans, using balance transfers on credit cards etc. The issue with remortgaging is, of course, that it's a secured loan and one which you will be paying interest on for longer than a short term loan.

Interest rates are low at the moment so it makes sense to extend if you can get a good deal. I wouldn't borrow the money on credit cards or loans because they have a much higher rate of interest. It would only make sense if you can pay the money back within a few months. If you can't, your credit rating will be shot to pieces and you won't get a good deal on mortgages or anything else. If you're not well up on personal finance, moneysavingexpert is a good place to start.

Can you do any of the work yourself?

"I wouldn't borrow the money on credit cards or loans because they have a much higher rate of interest. It would only make sense if you can pay the money back within a few months"

Er, no. Depending on how much the OP is borrowing and how long the mortgage has to run, a loan or cc money/balance transfer may be MUCH cheaper. The point is to properly research which is the best option depending on circumstances.

In this climate would you extend your mortgage?

Based on the likelihood that interest rates will stay low I would. But only if I was already very comfortable with the repayments, wasn't likely to need to move within the next 5 years and if I was confident of what would/wouldn't add value to the house.

You'd have to be very sensible about where you will actually get a return on investment as you'd effectively be going into negative equity?

I would extend in a mortgage but lock the rate in for at least five years. Rates are cheap now for mortgages, cheaper than a personal loan

It depends on the numbers. If you have an LTV of 30% and mortgage repayments are 25% of household income - maybe

If your LTV is 70% and repayments are 50% of household income - No

@KidLorneRoll
"Er, no. Depending on how much the OP is borrowing and how long the mortgage has to run, a loan or cc money/balance transfer may be MUCH cheaper. The point is to properly research which is the best option depending on circumstances."

Er, no. It would be madness to pay for home renovations on a credit card if the mortgage can be extended. 0% balance transfers are not free. They come with a transfer fee and only last for a very short time. If the OP is borrowing a very small amount which she knows she can pay back within months, then it might make sense. If she wants to buy a new sofa, for example, then it would be fine. But it sounds as if she has something much more large-scale in mind. Interest rates on a credit card will be astronomical once the balance transfer period ends.

My credit card is a Barclaycard. They are currently offering 28 months interest-free with a 1.73% fee. Once the interest-free period ends, the OP would be paying 21.9% on her loan. If she borrowed £10,000, this would accrue interest £2190 for the term of the loan. And this makes sense to you?

Er, no. It would be madness to pay for home renovations on a credit card if the mortgage can be extended

Only if you can't afford to clear the balance before the end of the 0% period OR your total interest payable on extending the mortgage is less than you'll end up paying from balance transferring to new 0% cards (for as many times as you need to prior to clearing the balance).

We used 2 0% purchase cards to finance our kitchen renovations and as a result have paid 0 in interest. It would have cost us more to extend our mortgage.

The OP would need to do the sums to work out what is best for their own specific circumstances.

It really depends OP. How long is your current mortgage? What rate would you be getting? How much would the work cost? How much are you able to save at present?

Depends. Just dated but perfectly liveable....no. in need of rewiring, new boiler etc then maybe.

We’ve recently moved. Got a bargain priced house so we’ve been able to release equity which has bumped our mortgage up by £100 a month and added 5 years back on to it. However we are early 30s so feel young enough to do this and an estate agent has told us with our plans, depending on the spec we go for, the house should be worth £100k more than we just paid (and the money we’re about to pump into it). So hopefully we can bring the mortgage term right down again.