1/04/2019

Blend & Extend or Renew

Now that we have our quote and initiated things with our bank to get started on our basement renovation, we have a decision to make about how we handle our mortgage.

Current balance of the mortgage is just under $250,000 and the appraisal we had done in May of 2018 had the value come in at  $365,000.  We can borrow up to 80% of the value and so we have to re-appraise at  $423,000.00 to get the full budget out of the house.  That would then bring the mortgage up to about $335,000.  I don't think we're going to get that high, but I'm hopeful we come in around $395-$410,000 the market here is really good for sellers right now plus all of the work we did over the last 8 months.

On to our mortgage options - these numbers are based on the assumption that we'll get the full value from the house.  Our existing mortgage is a blended rate of 2.73% until June 3, 2020: with the new amount added plus the re advance fee of $250.00 our new blended rate would be 3.20% until June 3, 2020.  We currently have 206 months left in our amortization.

  1. If we keep the 206 month amortization our weekly payments would increase to $492.28. 
  2. If we renewed with a 300 month amortization our weekly payments would be $377.80.

We currently pay more than we need to at $350/week  and once we're back to work we can comfortably handle $500/week - but we would have to get through this year which would be tight.

What would you do?
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4 comments:

  1. Extend, and then bump up to an amount that will get you back on track with your original amortization after your leaves are over. You have good prepayment options.

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    1. This is good advise I think - take the 300 month amortization and then start bumping up the mortgage payments as we can (like we did before).

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  2. I am very conservative with money and wouldn't borrow any more money until you were both back at work. Or I would do the basement work in phases as you could afford it. You are talking to someone much older here who has totally paid off two different houses long before the end of the loans and has done renovations in phases as I mentioned. We always wanted to be ready for a rainy day. Good luck.

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    Replies
    1. Thanks for the advise (and the luck)! For me to go back to work, we actually need the renovations completed as I work from home and my office is going to be turned into the nursery - depending on what the bank comes back with for finances, we'll look at phasing things out for sure.

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