Borrowing Cost Comparison

Four mainstream routes fund most UK extensions: a further advance from your current lender, a remortgage that releases equity, a second charge secured loan, and an unsecured personal loan. This tool lines them up against the same target amount and the same term, then shows the total interest each one costs over its life, not just the headline rate.

That total interest figure is the number that actually compares. A long secured product at a low rate can quietly cost more than a short unsecured loan at a higher rate, because the interest keeps accruing for far longer. Enter your target amount and term, and the calculator shows all four routes side by side so you can pick the one you can defend on total cost as well as on monthly affordability.

The four routes and their rates

A further advance from your existing lender typically runs at 4-6%, set independently from your main mortgage deal. A remortgage that releases equity is often the cheapest secured route at 3.5-5.5%, provided you have enough equity and your current deal is near its end. A second charge sits higher at 5.5-8%, but arranges faster than a remortgage and avoids disturbing your existing deal. An unsecured personal loan carries the best available rates of 5.6-6.9% APR and needs no security against your home, but is capped: most high-street lenders stop at around £25,000, and specialist unsecured lenders reach only about £50,000.

Why the cheapest rate is not the cheapest loan

The route with the lowest rate is not automatically the cheapest way to borrow. Total interest is driven by the rate and the term together. Add extension borrowing onto a mortgage running for another two decades and even a low remortgage rate of 3.5-5.5% accrues interest for all those years. A personal loan at 5.6-6.9% APR looks dearer on rate alone, but a shorter term (personal loans usually run up to around seven years) can mean less total interest paid overall. The monthly payment tells the opposite story: spreading the same amount over a longer secured term cuts the monthly figure while raising the lifetime cost. Read both columns before you choose.

When each route fits

Your existing mortgage decides most of this. If you are mid-way through a fixed deal, breaking it triggers an early repayment charge, which often tips the balance toward a further advance or second charge rather than a full remortgage. If your deal is at or near its end, a remortgage that folds in the extra borrowing is usually the cheapest secured option. Your loan to value sets which products and rate tiers you can reach at all, and every secured application faces the lender's affordability stress test, which checks you could still pay if rates rose. A whole-of-market mortgage broker can weigh an early repayment charge against a further advance and see lenders you cannot approach directly.

A worked example

Take a homeowner who needs to borrow an amount that sits above the high-street personal-loan ceiling of £25,000 but below the specialist cap of £50,000. A personal loan is technically available, but at that size it moves into specialist-lender territory where the rate climbs above the 5.6-6.9% APR best-case figure.

Against that, a further advance at 4-6% or a remortgage at 3.5-5.5% looks cheaper on rate. The catch is the term. Fold the borrowing onto a mortgage with twenty years left and the low rate runs for the full stretch, so the total interest can overtake a personal loan cleared in five. If the homeowner is locked into a fixed deal with a heavy early repayment charge, a second charge at 5.5-8% may still beat remortgaging once the penalty is counted. The right answer depends on the exact amount, term, and current deal, which is why the tool models all four at once. For the full decision framework, including the two secondary routes and the deposit protection rules, see financing your extension.