Extra borrowing on mortgage
Discussion
dakers1980 said:
About to move house and take on a bigger mortgage. I know in my head in the long run, any extra on top of what I absolutely need is expensive borrowing, but was considering getting an extra 5k as we're either going to need to replace the Mrs lease car, and/or I'm seriously considering solar for the new house. Rather than taking a personal loan, and then having a much larger chunk £150, vs about £31 extra added to the mortgage. Then we could overpay as/when
Conscious about trying to keep the emergency fund of 15k I've built up in cash so far, but equally I know we'll have some expenditure coming up.
Edit - mortgage is 340/345 @4.28%
Very personal decision. The maths will tell you it is more expensive longer term, but if you can genuinely overpay it might not be so onerous. It is only £5k. But what happens when you need another new lease in 3 years time??Conscious about trying to keep the emergency fund of 15k I've built up in cash so far, but equally I know we'll have some expenditure coming up.
Edit - mortgage is 340/345 @4.28%
Question is, do you need or just want those things, and will it impact your life if you do not have them.
Personally if you need these things I would take the £5k out of the £15k savings.
As above, a very personal decision. Have you thought about an offset mortgage, though?
They're very useful for scenarios where you don't necessarily need the money now, or even at all if things change, but you still have easy access to it while, essentially, not paying for it in the mean time.
You leave whatever is spare in the offset savings account and it costs you nothing in mortgage interest on that amount while it's there. You can draw money out to use when you like and you pay interest on just the difference between the outstanding mortgage and what's in the savings pot.
I took mine out over 25 years when moving house even though I had the savings to cover the move without a mortgage - I just didn't feel comfortable losing access to a big lump of money until it built back up.
The 25 year term means that although the offset savings was sitting at exactly the outstanding mortgage level, and hence zero interest to pay, there's a couple of decades of easy access to a large pot of cheap borrowing should I ever want/need it, and in the mean time it costs absolutely nothing.
The flexibility is brilliant if you're disciplined.
Worth considering depending on circumstances...
(Coventry BS used to be great for this - I and quite a few PHers have/had Coventry offsets but not sure about today.)
They're very useful for scenarios where you don't necessarily need the money now, or even at all if things change, but you still have easy access to it while, essentially, not paying for it in the mean time.
You leave whatever is spare in the offset savings account and it costs you nothing in mortgage interest on that amount while it's there. You can draw money out to use when you like and you pay interest on just the difference between the outstanding mortgage and what's in the savings pot.
I took mine out over 25 years when moving house even though I had the savings to cover the move without a mortgage - I just didn't feel comfortable losing access to a big lump of money until it built back up.
The 25 year term means that although the offset savings was sitting at exactly the outstanding mortgage level, and hence zero interest to pay, there's a couple of decades of easy access to a large pot of cheap borrowing should I ever want/need it, and in the mean time it costs absolutely nothing.
The flexibility is brilliant if you're disciplined.
Worth considering depending on circumstances...
(Coventry BS used to be great for this - I and quite a few PHers have/had Coventry offsets but not sure about today.)
Edited by PorkInsider on Tuesday 18th June 10:10
Gassing Station | Finance | Top of Page | What's New | My Stuff