Refinance mortgage to complete home reno
Apologies if this is not under the right sub forum.
My wife and I are one year in to our current mortgage. We are looking to finish off the basement of our house by putting in a nice 3 piece washroom. My plan is to use any extra cash from our loan to buy out our car outright rather than continue with our monthly payments. We would be borrowing roughly $30, maybe $40K if we decide to do some other projects around the house. I have about $20,000 in savings but I obviously keep that for investments, unexpected emergency costs, day care for our child etc...
We were offered a $15K line of interest with 7% interest. The other suggestion made by our bank was to refinance our mortgage. We are currently on a 5 year term (25 year amortization) at 2.59%, and they would add the new $30-$40K loan at about 2.19% which is current rate. There will be no fee for breaking the mortgage early since we are staying with same lender, the only cost will be $950 for lawyer fee/property valuation.
Does going forward with this make sense? Is there a better way of borrowing that I am missing?
Any input is appreciated! Thanks