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Top up mortgage v Loan - what's best bet & what's more feasible?

  • 08-07-2015 11:56pm
    #1
    Monokne
    Registered Users Posts: 3,929 ✭✭✭


    Hey all,

    Just looking for a financial pointer

    My wife and I are looking to extend our home. Costs would run between €30 & €50k. Our options are to take out a loan or top up our mortgage. I have not looked into either yet but I'm just curious as to what is more likely to be approved and what would be the costlier long term. I'm imagining the mortgage top up would be more expensive in the long term mind you.

    To give you an idea of our financial situation, we earn about €70k between us per year. Our mortgage is €130k and our home is valued about €250k, so I would imagine that equity we have in our house would make it a bit simpler getting a top up on the mortgage.

    Incidentally I don't know how relevant it is or would be in a loan application but we are good savers - we've a 5 year savings account due to mature in 18 months which will have about €25k in it.

    Any hints or tips or pointers welcome.


Comments

  • #2
    GerardKeating
    Registered Users Posts: 7,517 ✭✭✭GerardKeating


    Monokne wrote: »
    Hey all,

    Just looking for a financial pointer

    My wife and I are looking to extend our home. Costs would run between €30 & €50k. Our options are to take out a loan or top up our mortgage. I have not looked into either yet but I'm just curious as to what is more likely to be approved and what would be the costlier long term. I'm imagining the mortgage top up would be more expensive in the long term mind you.

    To give you an idea of our financial situation, we earn about €70k between us per year. Our mortgage is €130k and our home is valued about €250k, so I would imagine that equity we have in our house would make it a bit simpler getting a top up on the mortgage.

    Incidentally I don't know how relevant it is or would be in a loan application but we are good savers - we've a 5 year savings account due to mature in 18 months which will have about €25k in it.

    Any hints or tips or pointers welcome.

    You don't mention if your mortgage is a tracker, if so, most likely the bank would try to get you to give up the tracker in exchange for the TopUp, this might not be a good idea, if this is the case, use your saving or a separate loan.


  • #3
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    The top up would be a separate account and therefore should not affect your tracker rate. If you don't have a tracker you should consider switching mortgage and avail of a loan to value (LTV) variable rate which starts at 3.50% on a loan to value of 60% and you can include the additional amount. You will incur legal fees however you can get up to 2k to switch your mortgage. As you will be on a variable rate you can clear this top up at any stage by making lump sum payments. You will have to provide detailed costing's to the lender and if structural work is involved will need a qualified Architect/Engineer to supervise the works.
    If you decide on getting a personal loan the rate and monthly repayments will be higher however paper work will be less and you can also reduce or clear when your investment matures.

    GerardKeating wrote: »
    You don't mention if your mortgage is a tracker, if so, most likely the bank would try to get you to give up the tracker in exchange for the TopUp, this might not be a good idea, if this is the case, use your saving or a separate loan.


  • #4
    Monokne
    Registered Users Posts: 3,929 ✭✭✭Monokne


    Thanks so much for the pointers guys. Will sit down with the wife and talk it over. Our mortgage is fixed, fyi.


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