Home improvement loan or mortguage

A question about : Home improvement loan or mortguage

I recently bought a house for Ј150,000 and put down 15% deposit. The house needs a lot of work and im planning to get a loan for between Ј15,000 and Ј20,000 to get all the work done. houses in the area have sold in the region of Ј180,000 last year and im hopeful the house will be worth the investment at the end, in fact i think it could be worth more than Ј180 by the time im done for a number of reasons.

I dont plan on staying in the property for more than 2 - 3 more years and would like to sell on when im out of the fixed period of the mortgage. my mortgage rate is currently pretty good somewhere around 3.6% i think.

My options at this point are:

I can try to get a loan from a bank, I have found Ј15000 at 3.6% repayments are Ј275 a month for 5 years. the cost of this loan is ~Ј1400 over 5 years which is very cheap but I will be paying Ј275 more a month back which is plausible but would be a lot.

option 2 is to extend my mortgage for home improvement, assuming my current mortgage provider will allow this as im still in the fixed period and cant change without fines etc. I could hopefully get between Ј15000 and Ј20000 this way. the interest rate is again low, but over the course of say 20 year mortgage the cost is around Ј14000 plus interest rate changes however, as i don't plan on staying in the house for very long and the loan would be payed off in a house sale, it shouldn't cost me too much unless there are unforeseen circumstances.

at the moment if possible the mortgage extension seems to make most sense as long as they dont jack up my interest rate too much im waiting for some figures back from them.

I have a few other pros and cons in my head but i wanted to see if anyone had any big do's or donts here? and if what im proposing makes sense?

thanks

Best answers:

• Save or get a loan, if you can.
  You won't be able to draw out equity unless your property has gone up in value by Ј30,000 since you have bought it.
• As Foxy has said, there's no way the bank will extend your mortgage already.
  Have you officially moved into the property? If so, I really doubt you're going to get accepted for a Ј15k personal loan anytime soon until you're officially on the electoral roll and have been for at least a short amount of time.
  Double check your credit files to make sure that they're showing you as on the electoral roll at your current address, and then you can give a go at applying for a personal loan, if you're accepted, great. If not, you'll just have to save up or wait it out.
  You mention them about jacking up loan rates, you realise that if you take out a personal loan, the rate will be fixed for the term too?
• I've been in the property about 7 months now, the loan calculator on here said i should have about an 80% chance of success on a loan that's after a soft credit check i believe.
  will a bank not lend for the potential value after upgrades assuming a valuation is undertaken?
  thanks