Advice on Mortgage Top Up Vs Personal Loan

[Novic]

I am considering a renovation on my home that will cost in the region of €50,000. I will need to borrow about half of this amount and would like to get the best deal possible. My home is mortgage free but I do have a mortgage on a rental property – outstanding balance €153,000, 14 years to run, monthly repayment €1,200, rental income €700. The mortgage is currently fixed for 5 years with 4 years to go. I have no other borrowings and pay my credit card balance in full monthly. I also have annual earned income of roughly €34,000.

Should I ask my current lender First Active to top up my existing mortgage to finance my new project? Or look for a good deal on a personal loan. My work is private sector and therefore not 100% secure. I am reluctant to over stretch myself financially, therefore I’m looking for a repayment schedule of approx €250 additional monthly.

I would appreciate any help you can give.

Many thanks.

 

[LDFerguson]

Re: Advice on Mortgage Top Up Vs Personnel Loan

A personal loan will generally only be given for a maximum of seven years. Some banks will only go five. €25,000 over 7 years will cost >€375 per month so that suggests that an approach to First Active for a top-up may be the only way to stay within your stated budget.

I don't think any lender will give you a new mortgage of €25,000 secured against your home, and even if they did you wouldincur extra legal fees, so I think the top-up is your best bet.