When does borrowing more make sense?

Pulsedriver · 1 Jun 2020 at 15:25

Hey folks, was looking at finances earlier, I currently have;

1) Car loan (approx 11k left)
2) Credit card (lowish balance, around £1100)
3) Mortgage (approx 145k) for the next 28 years term.

Anyhow, at what point does it become sensible to borrow out, lets say, 15k against the above, pay the car loan, credit card, and block pave the front (that's been needing to be done for a while).

Many benefits there, including the house exterior pretty much done (already done the back etc) the front driveway is awful, but there are downsides, another 15k lumped on the mortgage... Albeit monthly wise it only adds around £55 vs the £225 for the loan per month I currently pay.

Anyone done the same? We have been at this house nearly 5 years now, the possibility of moving is always there most likely a part ex with a new home, as unlikely my work circumstances at the moment would give us the scope to sell privately and 'upgrade' to a bigger house privately. That said, we could likely be here a couple of years or so more at least.

Pulsedriver · 1 Jun 2020 at 15:45

Oh no of course I agree re financial advice on here, yeah the car repayments are £225 a month, credit card can pay between 50-100 or so per month, so arguably better by a fair amount each month BUT of course, longer term...Unless my house rapidly went up in value

Pulsedriver · 1 Jun 2020 at 20:53

Credit card is 0% at the moment, I tend to only use them when they are that rate and try to clear before that promotion time ends, the mortgage is 1.99% and fixed til late 2023.

I think from memory the car is about 3.9% (or slightly higher) with Tesco bank, the repayment charge is 2 months interest.

Pulsedriver · 2 Jun 2020 at 14:09

Hey folks, plenty of VERY good views here, i'll start by saying the decision is made, I won't be adding to the mortgage, nor trying, having read the posts by you all, it's given me some good insight / seeing the calculations in front of you (on screen) makes a lot of sense, and I appreciate having the different views, because that is important rather than just thinking "Oh I know it all and steam ahead etc!"

The mortgage is approx 145k and the house value is approx 280k, maybe slightly higher although in this particular climate who knows!

Yeah the card is 0%, it doesn't cost any interest, and when it does, it's been paid off by that point (I tend to take 12-18 month 0% purchase cards, I never balance transfer them either). And only ever keep 1 credit card of course.

The car probably stands out the most, when we moved here, it was our first home, and I had a car, which I had the idea of selling, to pay for new conservatory windows / patio door in the conservatory as they were knackered out, but was a £4000 job, so I sold the car, bought a cheaper car, then realised I wasn't happy with it, it was a lot older than previous etc and ended up selling it, getting a loan and a similar car to what I originally had when moving in, then a couple of years later, changed up again, each time, the loan kept increasing by a couple of grand, until the latest one, yes it was an expensive car in fairness (£15k)

The outstanding amount is £11,241 at a rate of 2.86% which I think was a good deal for a loan, and runs until August 2024.

Arguably I didn't need to spend such an amount on a car, I've always liked changing cars, and have thought at times about downgrading, but there isn't much sense I don't think based on the fact, I would probably get £13/13.5k for it pay the loan off and be left with barely £2000, not enough for another car

I don't do a huge amount of miles, but when I do the longer drives I prefer having a car which I know is reliable (as can be) and safe for myself and other half, and the 2 young kids.