# Borrow 30k Credit Union or Top up Mortgage?



## titch1 (21 Jul 2006)

We bought our first house a while back but it's in a total mess the whole house needs repair and we badly need 30k to do it all. We tried the room by room option but we're getting nowhere! We've been offered a min of 40k by our mortgage lender at 182e a month for 34 years(in line with mortgage term) but we're not sure whether to just borrow from the credit union and pay a higher amount but maybe over 10 years?I'm not even sure the credit union will give us that loan? Our mortgage repayments are already 1,000 at the moment so credit union would be tight and I'm wondering if we're better off going with the bank as we 'plan' to try and reduce the overall term anyway. Does anyone have any suggestions as it's causing war in the house and we really don't know what the best option is!


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## Hel_n (21 Jul 2006)

Why not ask your lender if you can repay the top up over a shorter term than your mortgage...


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## dillon1876 (21 Jul 2006)

Off course ask your lender to put the loan over 5 or 10 years! You will get a much better rate using your mortgage compared to the credit union rates, thus making the repayments much cheaper and saving you a fortune! The lender shouldnt mind as your home is being used as security.


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## titch1 (21 Jul 2006)

i asked them about a 10 year term and the quote was 406.80 variable rate at 4.1 % which would stretch us big time and it would hardly be worth it at that but would it still work out better than credit union repayments? i cant get my other half to actually ring up and find out as he has the account with them!!


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## irishpancake (21 Jul 2006)

titch1 said:
			
		

> i asked them about a 10 year term and the quote was 406.80 variable rate at 4.1 % which would stretch us big time and it would hardly be worth it at that but would it still work out better than credit union repayments? i cant get my other half to actually ring up and find out as he has the account with them!!



titch1:

I'm afraid it's not going to be good news.

You are looking for the impossible really. 

The Credit Union option for borrowing €30k or €40k over 5 or 10 years would not be significantly less per month than the amount quoted by your lender.

As a matter of fact, getting €40k over 10 years @ 8.9%, which is what my CU charges, would cost €497 p/month.

The link to my CU (ESCCU)  loan calculator is: [broken link removed]. Put in the figures and check it out.

Also my CU provides an Excel option where you can model various amounts over various terms [broken link removed].

So if the monthly amount for short-term finance is not managable, the only option is to finance this by the top-up from your bank, and hope to reduce the impact eventually by over-payments.


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## Hel_n (21 Jul 2006)

I think you're in for a bit of a shock when you do ring the credit union! They wont come close to the rate of 4.1% that your current lender ahve offered you. Have you looked into switching to another lender and availing of a better rate? Also you can borrow the amount you require (30k), as opposed to being told you have to borrow 40k.


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## titch1 (21 Jul 2006)

Thanks for the links. On it, it's less than a tenner cheaper alright so it sure is bad news! The lender is permanent tsb they told me I must borrow a minimum so am I being conned into agreeing unneccesarily? This looks like the better option alright. Also, I was told that if you switch mortgage lenders, you'll incur a serious penalty charge does anyone know about this? We still have to stay with them for another year I presume, because we're on a fixed rate for 2 years. We're new to the mortgage business sorry if the questions sound dumb!


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## Hel_n (21 Jul 2006)

Since you are in a 2 year fixed rate you will have to pay a penalty if you decide to switch.  It sounds like they are offering you a 'One Plan' equity release which has a minimum loan amount of 40k.  You don't have to draw all of this down however.  AFAIK you have the option of taking a chequebook and you can draw down part of your top up as you need it - minimum 3k at a time.  You only pay on what you draw down.  They may have changed their t&cs so you should check it out with them beforehand if you do decide to go with the top up.


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## titch1 (21 Jul 2006)

thanks hel n
thats what theyre offering alright. would you know if im able to draw down what i need (which is not the full 40) and pay back a lump sum which has been leftover? they just keep confusing me!


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