House Work Borrowed Funds

[GT89]

In short, we are looking to undertake a programme of works across the whole house to an estimated 80k.

The funds will come from additional borrowing, are circa 40% the current mortgage. House value estimated 850k, perhaps a bit higher on completion.

The works are being mostly completed by myself with some trades where required.
Headline figures being 40k required now and 40k in 6-9 months.

Is it best to take all of it now and squirrel what's not required in PB or a simple savers account (something with zero risk), or chance it and take two smaller additional borrowing as required?

I appreciate I'll being paying interest at circa 4% on money to sit in the bank, but equally it could then get worse and become 5% easily enough when I need it.

Of course there's also the change I win the 1 million whilst it's sat in premium bonds.... (Not a serious comment)

All advice welcomed.

[Sarnie]

If you think you can beat the interest being charged then there is merit in doing it one application, doing it twice will require two full application processes, so two lots of credit scoring, affordability checks and property valuations.

You also wouldn't want them coming out to value the property when it wasn't complete or habitable, as they may not lend if the property isn't in an acceptable condition.

[Help78]

Borrow the 80k all at once.

Imagine how bad it would be if you're halfway through the work and there's an issue getting the other 40k or it becomes a lot more expensive to borrow it.

[gangzoom]

We borrowed in 2 parts but it would have being easier to just borrow the whole amount once. We now have 3 parts on the mortgage which is fine, but it's complexity that wasn't really needed.

[alscar]

When we did our "big" move 22 years ago it was to an old listed house and apart from borrowing a "silly" amount of money we also wanted a contingency fund / renovations fund built into the mortgage as such so took the LTV up to 75% and put the spare money into 2 high interest access accounts.

[ecs]

Also, if you're doing it via a mortgage, they'll charge you a setup fee for each loan/account - the going rate seems to be about £999 from most banks.

Unless you're going to pay it all off in the 3-5yr term, have a think about the future. We did similar about 5yrs ago and have 3 mortgage accounts; one for the house and two for the renos. Costs over-run like they always do, so we had to borrow more about 4-5 months in. Now we're at renewal we can merge the first two accounts, but the third's anniversary is too far away from the others to combine without an ERC, letting the first two accounts switch to the standard variable rate for a couple of months or paying two setup fees at £999 each.

So can't advise you on what to do, but there are fees fees fees for everything you do, and of course the interest!

Edited by ecs on Tuesday 14th July 08:32

[Beetnik]

A golden rule of credit is take it while you can. Circumstances can change, as can lenders appetites and you wouldn't want to be part way through a build and not have the funds to complete.