So I want to free up some cash to get a wood burning stove fitted.

Two options

a) Take two months worth of mortgage holidays.
b) Add to the mortgage loan itself.

Option a) doesn’t increase the capital I owe, but adds two months of interest to the figure. This is easier also from a paperwork point of view, a simple phone call.

Option b) adds to the capital, but no break in captial + interest payments.

15 years left on the mortgage.

Which option is better in the longrun, if any?

Both those options make it borrowing a smallish amount of money (relative to the mortgage I assume) for a long time, which isn’t usually a good thing if you’re able to afford it otherwise.

If it were me I’d get a new credit card that has some initial 0% period on purchases. Quite a few out there with over 12 months of effectively interest free loan. It may not help free up cash immediately, if it needs to be cash tho and you can’t pay for the stove with it, but you can put your normal monthly spend on it and use the cash that frees up. Just have to make sure you pay it off at the end of the initial period.

If you have central heating already this is like adding to your mortgage to buy a new super television.

It will not save you money unless your on lpg or have unlimited free wood.

What mattstreet said

Fitting a wood burning stove should only cost you around the £2k mark.

Putting that amount on your Mortgage will mean you will be slowly paying it off over the 15 years plus the additional interest (probably 50% of the money you are borrowing)

Just put it on a 0% credit card and pay it off slowly within the 12 month interest fee period.

Or, option C – check your repayment clauses and find out what your maximum overpayment is.

Assuming something like 20%, borrow the money using whichever method is easier (probably A) then pay it back using overpayments.

£150 a month extra would clear a £2K stove in 12 months, and then just leave the overpayments as is and retire a couple of years earlier… 😉

As above, A&B straight don’t make long term financial sense unless you clear it off ASAP, but A is better of the both by some way as it just defers the interest and means you pay a smidge more. B sticks the interest on the £2K on the bill for the next umpteen years. Borrowing on a mortgage is about the cheapest method of finance you can get (aside from 0% cards etc) but only if you pay it back quickly.

Thanks guys,

@nickdavies that is a genius idea. Its HSBC, they will let me make unlimited overpayments with no fees.

I don’t have any 0% new purchase credit cards at the moment, but plenty of cards I can 0% balance transfer to with 3.5% fee.

Am I right in saying on a 2.34% tracker, assuming base rate stays the same, and if I clear it in a year with overpayments this is less interest cost than the 3.5% insta balance transfer fee i’d pay going the credit card route? (not sure how compound interest effects mortgage option)

I also like the flexible repayment route with the mortgage as opposed to a fixed minimum fee with credit card.

At a very basic level, if you pay it off in 12 months, that interest rate of 2.84% will equate to about 1.6% of £2000, assuming that’s the figure. £32 in interest.

So yes, cheaper than a 3.5% fee – £70 in fees. Considering most 0% cards are only 9 months, then also you have to factor in the decreased flexibility or another 3.5% fee on the balance.

Mortgage gets less attractive if you want it on the knock for a long time – at that rate 3 years will cost you £90 in interest and 20 years over £600!

(Friday night maths E&OE… 😉 )

Here is my rather useful mortgage calculator I share on here sometimes:

https://docs.google.com/spreadsheet/ccc?key=0Al-Bq4gR-Hn7dHdROXVlaFJtYnFQSlVoZzI2c085R0E&usp=sharing

nickdavies – Member
At a very basic level, if you pay it off in 12 months, that interest rate of 2.84% will equate to about 1.6% of £2000, assuming that’s the figure. £32 in interest.

So yes, cheaper than a 3.5% fee – £70 in fees. Considering most 0% cards are only 9 months, then also you have to factor in the decreased flexibility or another 3.5% fee on the balance.

Mortgage gets less attractive if you want it on the knock for a long time – at that rate 3 years will cost you £90 in interest and 20 years over £600!

(Friday night maths E&OE… )

Cheers Nick, great disclaimer lol, its 2.34% i’m on so even less than £32?

@mudshark will have a look at that now thanks.

2.34% i’m on so even less than £32?

You said base rate tracker so I assumed 2.34 + 0.5… if 2.34 includes the base rate then yes even less! 🙂

It’s very basic though, so if you pay less at the start and more towards the end or the boiler goes bang halfway through and you miss a few months the compound interest puts the cost up.

Cheers Nick, looks like a winner to me 🙂

Then once youve got used to paying that extra when youve paid your fire off continue to drip feed that off your mortgage and you`l have it paid earlier and with less interest 😀
Mine will be paid off in 7 months 😆 mortgage not fire 😆