WWYD? - Mortgage extension vs remortgage

[CogitoErgoSometimes]

I owe circa 7% of the value of my property on a repayment mortgage, the rate is a variable 2.5%, there are no penalties & it will be paid off by 2017. I want to do a fairly substantial bit of work to the house for which I'll need to borrow another 5% of the value. My lender is offering about 4.69% on new borrowing for existing customers

Choice 1. Keep the existing mortgage, pay it off by 2017, and borrow the remainder as a 10 year addition paid off by 2023. Means paying an extra £200-300/month for the first 4 years which will be tight-ish

Choice 2. Remortgage for the full 12% over a 10 year term. Reduces my monthly mortgage payment by £300.

Choice 3. Ideas welcome. :)

I'm pretty sure the maths favour Choice 1... lower interest rate on the existing mortgage, big drop in outgoings after 4 years when there may be other calls on my cash e.g uni fees. But Choice 2 is attractive because it means our monthly budget would be a lot less squeezed short term.

So WWYD? Appointment with the bank looms and, for once, I'm not sure what I want. Thanks in advance

"I'm pretty sure the maths favour Choice 1... lower interest rate on the existing mortgage, big drop in outgoings after 4 years when there may be other calls on my cash e.g uni fees. But Choice 2 is attractive because it means our monthly budget would be a lot less squeezed short term."

I guess it depends how important the next 4 years are to you. And for me a lot of that would depend on how old my kids were

• if you are still paying for expensive child care, then you want to minimise costs during this period
• if they are primary age and you don't have a lot of childcare costs, then I would take the pain over the next few years, knowing I would then be much more comfortable for those expensive teenage years.
• if they are teenagers, then I would probably want to spread the costs over the next 12 years

One teenager. Thanks.

Now Cog I would have come to you with this question! Lol in your circumstances Id think about option that will reduce monthly outgoings for timebeing...gift yourself a financial break for a while then get stuck back into it once DS (think I remember rightly its a DS you have, sorry if I'm wrong) starts to move towards independence xx

I'm increasingly reaching that conclusion Mum2Fergus. I think the (uncharacteristic :) ) wobbles are because I've been paying extra on the mortgage for quite some time and the finishing date was actually in sight. 2016/17 kissing good-bye to the banks... champagne ready etc! So putting that day off by a few years felt like a backward step IYKWIM but I think it makes the most sense if I want Cog Mansions properly upgraded. Thanks.

The wobble is perfectly understandable...you've worked so hard to get to where you are. Time to take your foot off the gas a wee bit xx

You're quite right. :)