Question about remortgage/adding in bills

[Ron Burgundy]

i posted questions about buying a house for the first time a few weeks ago, but now we ahave moved the goal posts and here is where we are at.

a house worth €140k, we have a car loan of 13k and a credit union loan of 10k.

we have income of 44k and 23k.

so we are looking to remortgage to build an extension onto my fiancees family home where we will live.

i know we can only borrow 90% of the value of the house so is it a good idea to go for this and any advice is welcome, we were thinking of adding the bills to the mortgage to clear the lot.

Ron.

 

[ClubMan]

Bear in mind that if you consolidate your car and CU loans onto your mortgage and don't plan to repay the top-up over a couple of years (similar to the original loans) then you will most likely be paying for your car and CU loan expenditure over a number of decades. In fact doing this could end up more costly in the long run than the original loans (i.e. lower total monthly repayments at a lower rate may prove more expensive than higher total monthly repayments over a shorter period). You really need to crunch the numbers and make sure that you understand all of the implications of doing this. In general a mortgage consolidation to clear existing debts should be a once off last resort for regaining control of finances that have become unmanageable. Note that interest on any top-up will not qualify for owner occupier mortgage interest relief which applies only to interest on loans used to purchase the person's home.

 

[Ron Burgundy]

what aboout the extension on the house, will this qualify for mortgage relief, that would be about 80k i'd say ???

 

[ClubMan]

Yes. Interest on loans used to purchase or improve/renovate the owner occupied property qualifies for tax relief. Interest on top-ups used for other purposes does not.