should we remortgage?

[hynes9463]

we have a house for over a year now..bought for 275k and now worth maybe 330k..we currently have a variable rate mortgage (4.75%) over 35yrs costing us e1050 a month(including tax relief)
we also have a 40k loan from the credit union over 5 yrs costing us e800 a month..
should we remortgage to get rid of 40k loan?

 

[purplealien]

Don't remortgage- if you stick it on your mortgage, it'll take you 35 yrs to pay it off. Pay it off with the C.U and you'll be free from the debt in 5 yrs.

 

[ClubMan]

Don't remortgage- if you stick it on your mortgage, it'll take you 35 yrs to pay it off.

Unless you either explicitly arrange a shorter term or just accelerate the repayments unilaterally to pay it off sooner. Replacing the CU debt with mortgage debt over a similar term may or may not be most cost effective but you'd need to crunch the numbers to figure that out.

Pay it off with the C.U and you'll be free from the debt in 5 yrs.

The CU normally requires that you keep money in shares before they will lend to you. This runs against the normal "don't save while borrowing" rule of thumb and inflates the real cost of borrowing. The CU may be a good place to borrow for some people but it's not the no brainer that some people (still) think it is.