Can someone help me decide how to decide what to do please? Mortgage? Loan?

[glass3quartersfull]

Hello, I’d like some advice as I can’t see the wood for the trees at the moment and a sensible input would be appreciated

Here is our situation

DH earns 32k age 53
I earn 28k age 45

14k left on our mortgage with 2 years to go. Monthly payment is 600 a month with interest rate at 3.75%

We have a joint personal loan with around 6500 left to pay which is 170 a month at 3.54%.

We have around 5k in savings but that is all.

Our house needs home improvements, new bathroom, windows, kitchen, front garden wall etc so not cheap things.

I’d like to consolidate our loan and mortgage into a personal loan with some extra borrowing to at least get some of the work in the house done.

On one hand we’d be mortgage free but have a large personal loan which feels like defeating the object of getting rid of the mortgage, on the other hand I’d like the home improvements done!

Basically I can’t decide whether to borrow and get the work done or hang on and try and pay down the mortgage and get rid of it in order to release that 600 a month to then save to get the work done.

Any thoughts please?

How long will you want to stay at that house?

Secured debt is always better than unsecured.

Assuming your house is worth more than £100,000
then your new (£30k) mortgage would be under 33% of equity so you should be able to shop around for a cracking rate (under 2%)
and borrow over 5 years

so that you are in an excellent place with the house done before you turn 50

I would pay the mortgage down I think and have a go at reducing outgoings as much as possible especially reducing grocery bill as its usually the easiest to bring down.

That way you could pay off the mortgage quicker if you're allowed to make over payments. Do you know if you are?

We’ve been in this house 19 years and have no plans to move. I reckon we’ll need to spend 30k getting everything done. The house is worth around 200k I guess.
I’m just sick at the thought of taking the mortgage loan back out as The end is nearly in sight. Still, if we’re borrowing it all as personal loans then it may as well be a blooming mortgage!
Unless we don’t do anything to the house I can’t see us ever being debt free. 😭

We got our mortgage down to £21000
then did a HUGE amount of work (like £150k)
and then paid it down again over the following ten years
and ended up with the house we want
and mortgage free by 50

Do the house, make it right and if the rate is half your current one you'll still be mortgage free before too long

Heck, I’ve just seen the thread title. Sorry 😐 too many decides!

Its a big decision - worth saying twice

Savings rates are currently very low. Why are you not paying off your loan, which is probably a higher rate than your savings ? So pay off the loan. Then you have 170 to pay extra into paying off the mortgage early ? Pay off the mortgage. Then save or take loan or release equity for the renovations.

Pay off your loan as quickly as you can - the mortgage can wait.

Consolidate any remaining debt into the mortgage. Do home improvements very slowly and save for them - it will make you feel empowered to save in advance. If you really can’t wait for the new bathroom, take it out of the mortgage.

Why is your mortgage rate so high? With such a small mortgage you should have been able to get a great rate.

The mortgage rate is currently 3.09% but the fixed rate expires next month and it will rise to the SVR which is 3.75%.

I cannot switch to another deal as we owe too little as it stands to remortgage. Hence the wondering whether we should remortgage for a larger amount. After speaking to DH he’s really unsure about remortgaging for 40 or 45k which is what we’d probably need in order to clear the mortgage and loan and have enough left over to do what we’d like. He doesn’t think the house needs that much doing to it and we should just do it bit by bit.
We’ve done it that way for years and we always seem to have a big job looming on the horizon, we’ve been here nearly 20 years and have done the bathrooms and kitchen once in the first few years after we moved in but it’s all needing doing again now. It’s never ending.

glass3
I will go against the grain here.
Make your house right. Do it now.

Borrow at rock bottom rates while you can - lump it all together into a secured loan on the house over five years.
Get skilled trades in before they put their rates way up in a year or two.
If you can, buy all of the stuff before interest rates fluctuate next March.
And then live in the home the way you WANT it.