Financing Home Improvements

[J4CKO]

Situation is, mid forties, we have no mortgage, house worth between 500 and 600 grand, both earning, no debts but have one kid at Uni and potentially a second from september, have spare cash each month but not vast amounts for spending on home improvements, whats the best way to finance say 60-80 grands worth, extension, kitchen, roof and a few repairs.

What are the options, that dont cost vast amounts each month, can you use an interest only mortgage to do it, idea being we pay it back when able as a lump sum.

[Ozzie Osmond]

Internet mortgage can be highly effective. Look, for instance, at the Moneyfacts website to see what's available.

There's also a bloke on here called Sarnie...... Or so I'm told!

[Elysium]

J4CKO said:

Situation is, mid forties, we have no mortgage, house worth between 500 and 600 grand, both earning, no debts but have one kid at Uni and potentially a second from september, have spare cash each month but not vast amounts for spending on home improvements, whats the best way to finance say 60-80 grands worth, extension, kitchen, roof and a few repairs.

What are the options, that dont cost vast amounts each month, can you use an interest only mortgage to do it, idea being we pay it back when able as a lump sum.

I would look at an offset mortgage. We have one with First Direct, which works well.

http://mortgages.firstdirect.com/our-mortgages-exp...

It would make sense to borrow a lump sum, then consolidate savings into an offset. This would give you a flexible pot to dip in and out of to fund your refurb, using savings to reduce interest costs, but avoiding tying up all of your cash in the property.

[Sarnie]

J4CKO said:

Situation is, mid forties, we have no mortgage, house worth between 500 and 600 grand, both earning, no debts but have one kid at Uni and potentially a second from september, have spare cash each month but not vast amounts for spending on home improvements, whats the best way to finance say 60-80 grands worth, extension, kitchen, roof and a few repairs.

What are the options, that dont cost vast amounts each month, can you use an interest only mortgage to do it, idea being we pay it back when able as a lump sum.

Yep, at that LTV, Interest Only will be an option for you with certain lenders, probably would be barely £100pm on a 1.59% two year fixed rate......

[J4CKO]

Just resurrecting this, the question of home improvements has reared its ugly head again, is the situation still the same, looking at the First Direct Offest stuff now.

[Claude455]

Over what term will you be looking to borrow £80k, and how will you pay it back?

[J4CKO]

Claude455 said:

Over what term will you be looking to borrow £80k, and how will you pay it back?

Well, we will downsize to a smaller house in maybe ten years or so, there is also the possibility of the odd windfall, can save up, going to use existing savings to put against the mortgage in one of those First Direct offset mortgages, my wife is keen to not lose savings, to my mind having money sat in one account is pointless when you are borrowing from another really (interest differences notwithstanding) the FD mortgage, if you move monies to them lets you still access the savings and they still exist but you dont pay interest on that portion of the mortgage. At the moment we have kids at university which is costing a grand a month in Accommodation, hopefully once they are done we can just pay it down, int he meantime we have the benefit but are effetively just renting that bit of the house.


The works would add value to the property, similar ones are 700k ish so whatever happens we can sell it, release the equity, pay off the 80k and buy something smaller, in the meantime we get a new kitchen (its knackered, 20 years old) and an additional dining room, and the main one, I get the garage back as it currently has a toilet and utility in half of it.

Edited by J4CKO on Thursday 23 February 09:53