What is best in your opinion-short term loan or long term?

[SandyChick]

Hi, i would like your opinions please. We need to lend money for home improvements. We need around 10k. We dont know if we should take a short term loan over 4 years paying around £190 per month or to lend it over the remaining term of our mortgage costing us an extra £60 per month for the rest of our mortgage. We underdtsand the interest implications etc but my main question is do we be skint for 4 years but debt free (apart from mortgage) or pay the lower payment which we propably wouldnt notice per month but have that for the next 20 years??

I can only tell you my personal approach to this one which is that I think a 'home improvement' is one of the few valid reasons to extend a mortgage. A mortgage is still a relatively cheap way to borrow money and you're investing in property which is an asset that usually appreciates in value when it is improved. Obviously, you've got to be able to afford the £60/month extra and factor in that interest rates are forecast to rise soon... but that's what I've done in the past.

It will add value and we'd still have 25% equity even in the current market. The plan is to lend it over the remaining term of mortgage as additional lending for now and in the next few years try and pay a chunk off it and take out a short term loan for remainder to reduce the amount we pay back in interest. It's a lot of money tho. I think we need to look at it as part of our mortgage to justify it. We had planned on just saving up and doing the work as we go but we're not getting anywhere fast.

Thank you for your opinion.