Should You Overpay Your Mortgage and Borrow Money to Renovate Your Home?

Q. We currently have a £122,000 mortgage and need to complete a home renovation that will cost £25,000. You can save about £500 a month to spend on home renovations, but it will take years to save. Is it worth overpaying for a mortgage and borrowing the amount you need?Our fixed rate ends his January 2024.
AW

a you lost me I don’t see any reason to overpay the mortgage just to get the loan at some point in the future. I’m also a little concerned about the overpayment cap (usually 10% of the loan balance) as I have a fixed rate contract. In your case this year he may be limited to overpaying £12,200, which is a little more than double his £500 savings in a month, thus violating the lender’s limit unlikely to. But as we said before, why would you want to overpay unless your current mortgage represents the maximum amount the lender is ready to lend you?

It is also unclear when the renovation work will be completed. As soon as possible, I suggest asking the lender if she is prepared to increase her £25,000 mortgage to pay for the work. If you can wait a while (which I’m suggesting is the best course of action in the current mortgage situation), wait until the fixed rate ends and put an extra £25,000 in when you re-mortgage your new contract. You can consider including

Another way is Personal loans section of Moneyfacts.co.uk You can enter the amount and period you want to borrow. For a £25,000 loan over 5 years (60 months), you can expect to pay back a fixed amount of £450 to £500 per month.

Need expert help finding a new mortgage? Use our online tool to search thousands of deals from over 80 lenders Guardian Mortgage Servicewith L&C.

Leave a Comment