Top-Up or Home Improvement Loan?

[FiveFingers]

My SSIA is maturing next month and I’m due just under 20,000. We had intended to use this money to finance the addition of a sunroom onto our house (hubbie doing most of the work). However, as well as our mortgage we have two car loans as follows:

• 13,000 taken out in November 2004 for 60 months at 243.55 pm. HP Agreement.
  Settlement figure as of today = 8991
• 9,500 taken out in October 2005 for 48 months at 241.24 pm. APR = 10.5%.
  Settlement figure as of today = 7868

We re-mortgaged our house at the beginning of this year with NIB for 120,000 over 20 years at ECB + .79%. Our house is currently valued at 220,000. A rough estimate for the building of the extension is about 20,000.

The way I see it, we can either opt for a top-up or for a personal loan/home improvement loan.

How do top-ups work? Can we get the top-up at the mortgage rate but for a shorter term? Or should we spread it out over the entire term of the mortgage and free up a little cash (to save for the next car loan!). What kind of legal fees and paper work is involved in getting a top-up? I really don’t want to go through all that hassle again.

Or should we leave the mortgage as it is and just opt for a personal loan/home improvement loan and save on any legal fees and paper work? BOI are offering 20,000 over 60 months for 393.32 pm – fixed rate of 5.9%. That’s pretty good, isn’t it?

Any thoughts?

Edited to add: We intend to use the SSIA money to pay off the two car loans. The question is how best to finance the extension.

 

[Guest107]

aib will give you a personal loan at 7.2% if you INITIALLY borrow 25k . As its variable you can hand some back the following month.

thats a dirt cheap mortgage you simply will not do better so try a top up and get rid of the never never car loan if you can . Top up 20k to keep the LTV under 60% .