Extra borrowing when remortgaging

[Hopefulmama21]

We are due to remortgage soon, our rates are going up but will still be affordable (just very annoying).

I have been dreaming about having our kitchen revamped for a few years now and have had a quote for new cabinet doors and worktops for just under 9k.

I have done a cost calculator and worked out if I asked for extra borrowing when we remortgage it will cost roughly £65 per month over the intial term - a lot more in the long run I know.

Would it be a bad idea to do this? I see people using remortgaging quite frequently to do home renovations and I'm unsure if this would be an okay thing to do in our circumstances.

LTV would remain under 70% with the extra borrowing. Equity is currently around £170k depending on valuation.

It depends on your circumstances but it does seem like a high interest way to borrow the money? I think a lot of kitchen companies will offer 0%?
Do you have any savings you can put towards it? Remember there will likely be additional costs on top of the cabinets and worktops…

We do have some savings which are slowly adding up and currently in ISA accounts. I will look at 0% offers but the monthly payments but I think the monthly payments will be much higher that way (interest free I know but mentally feels harder).

Kitchen appliances are all fine to stay, the whole house/kitchen is only 5 years old but it was already in when we bought the house and isn't to our style.

@Hopefulmama21 if you add the new kitchen costs to your next mortgage surely it will be more expensive in the long term??
Kitchen companies 0% would be cheaper??

It’s a mad idea. If you NEED it get a 0% credit card for 24months and pay it off as quickly as you possibly can.

Have you been saving more than the mortgage increase so it still feels comfortable when it occurs?

For only £9k I would try and borrow as little as possible and more cheaply than the remortgage.

We had to remortgage to do the roof as it was more than our savings. Our mortgage term was only about 8 years and it’s on a 4 year fix and we are making the maximum over payments.

@DesperateforSunshine I totally get the compound interest is a worse choice long term but paying off 9k over 24 months is £375 a month, our mortgage is already increasing by around £400 a month with the change in interest rate so that wouldn't be feasible.

@RandomMess yeah we have already started putting away the extra £400 a month that the mortgage will change by so that we are trained financially over the next 6 months to not miss that money.

I have looked at an overpayment calculation and I think if we overpay as planned by roughly £100 per month by the time we get to 5 years we should be almost at the same level of equity as if we hadn't taken the extra money. Does that sound right?

Borrowing over the mortgage term to replace 5 YO kitchen doors just because you don't like them is insanity.

If you're saving £400 pm to live as if your mortgage has gone up,you'll have a good chunk there by the time you remortgage. Plus you say you have other savings? Then top up with a 0% credit card or interest free finance and you don't need to add to the mortgage.

Hate to say it but I think if you can’t afford the £375/month then maybe you can’t afford it… have you calculated how much you’ll actually pay on the £9k if you add it to your mortgage?

Maybe just paint the cupboards and do the work top if you really can’t afford it?

Calculate what the total extra cost will be over the life of the mortgage- is it worth it? It’s not a no-brainer either way-yes there are cheaper ways to do it but they will require you to pay more off in the short term, which you say you can’t do.

By way of example, if you borrow £9k and pay it back over 20 years with 5% interest, the total amount will be just over £14k. Is it worth it at that price? Only you can say.

If it is just the cupboard doors you are replacing could you fit them yourselves?

We gave our kitchen an uplift a couple of years ago. The kitchen doors were in poor condition with the laminate peeling off but the cupboards underneath were in good condition. We bought painted solid wood doors that my partner fitted as well as the floor and tiled. We had stone worktops installed which was the only bit we had to pay to be fitted.

I would only add something like a kitchen to my mortgage if there was the intention to overpay so that it is paid off within a shorter period and the comparison of total cost is better than a loan over that period.

I would also question the opposite - I would go through your budget with a fine tooth comb, optimise all savings and work out how quickly I could save it most of it? Finally it would depend on my other circumstances - do I have any other debts/loans, do I have an emergency fund, are there any other big purchases potentially on the horizon - old boiler? Unreliable car?

Could the doors be done before the worktop. Due to time and other commitments we swapped out our old kitchen for new one item at a time we needed to do a small rejig of cupboards as we moved the oven so it wasn't at ground level (young children) so bought a couple of new cupboards of different sizes. Then we replaced the floor. After that the doors then worktop finally we tiled and painted the walls. It took 9 months but each step was a 1-2 weekends

5 years is 60 months. £9000 / 60 = £150 and that's without any interest. Look into using your savings, interest free credit etc. first and if you do add to your mortgage then look to repay the extra borrowing as fast as possible.

Agreed. Especially if the whole thing is only 5 years old a s you're just doing it cause you fancy it.

If you’ve been quoted £9,000, believe me (I’ve done plenty of renovations), it won’t end up costing that. The price will go up because there are always extras you haven’t accounted for, and you never know what issues they might discover along the way. Either ask for more money upfront or not do it at all.

I personally wouldn’t take on a renovation that requires monthly payments. Just repaint the cabinets and save up until you can afford to do it debt-free.

Thanks everyone for the thoughts. We can't paint the cupboards unfortunately as they're gloss so it would end up looking terrible.

There's nothing wrong functionally with the kitchen other than a few chips on the doors but overall its very clinical and not in keeping with the rest of the house at all.

If we do go ahead we wouldn't need to pay for a fitter as we're fortunate that DH can do the work, we would only pay for the fitting of the worktop.

Lots to consider but thanks for the breadth of opinions its helpful.

Lots of gloss type ones can be peeled off and then easily painted. Worth getting one of those companies to check. Less wasteful too.

I think borrowing £9k for kitchen cabinet doors and a worktop is insane, even more so talking adding it to your mortgage (which is debt secured on your home). People who add to the mortgage for rennovations should only do it if the changes add value to the home.

You are already impacted by your mortgage going up, sounds like it is only just affordable for you. Adding more to it isnt going to help you. At the moment the forecast for interest rates are only going one way, which is up.

Its your life and your money but borrowing £9k for a cosmetic change that isn't needed isnt that smart.

No, I wouldn't borrow over a 25+ year period to replace a 5 year old kitchen.

I would save up, a specific kitchen fund and replace it when I had the spare funds. It would probably take a few years but would be much, much cheaper in the long run.

Just because 0% credit card offer is for 24 months, it doesn’t mean you need to pay it off in that timeframe. Once it’s finished you can just balance transfer to another 0% cc. Balance transfer isn’t free, but it’s pretty cheap, usually around 3%.

So even if you only ever paid £100 towards cc debt and balance transferred every 2 years, it would take you around 8 years to pay it off, with less than £400 paid in interest, which represents 0.55% APR. Pretty sure that’s cheaper than you mortgage. It’s even less if you can throw a bit more money towards it.

Have you considered not locking into a new mortgage deal and going on a tracker? There’s a lot of instability in the market at the minute and rates are high - but in a few months or so when they settle you might get a much better rate

You're right about being able to just do another balance transfer, but you can usually do this fee free. I use balance transfers to offset against savings to make money and never pay fees for the 0% deals.

I’d get a 0% kitchen loan they all do them which is cheaper over the long run.

Didn’t realise that, thanks!