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    • pioneer22
    • By pioneer22 10th Sep 17, 5:15 PM
    • 412Posts
    • 151Thanks
    pioneer22
    Best way to fund house renovations
    • #1
    • 10th Sep 17, 5:15 PM
    Best way to fund house renovations 10th Sep 17 at 5:15 PM
    Hey,

    We have approx £55,000 in terms of equity in our house after fees and stamp duty and so on.

    We are looking at buying our next house which will be in the region of £230,000 we were wanting this house to be fully decorated for when we move in. Floors, Kitchen, Furniture, Lighting, Bathrooms etc

    In terms of funding this would we be better off

    A. Putting down 30k as a deposit and use 20k to fund it, the mortgage payments if we get the rate quoted would be £770. The other 5 will be used to clear Credit Card/Overdraft etc.

    B. Put down the full 50k as a deposit making the mortgage payments £693 and getting a loan to fund the renovations

    We're planning on this being our forever home, not sure which way to go about it because we would only have a £77 difference in mortgage payments a month but I'm conscious we wouldn't have as much in equity and it would almost be like having a loan of £77 for 35 years.

    What would you MSE'ers do?
Page 1
    • Doozergirl
    • By Doozergirl 10th Sep 17, 6:41 PM
    • 23,749 Posts
    • 66,086 Thanks
    Doozergirl
    • #2
    • 10th Sep 17, 6:41 PM
    • #2
    • 10th Sep 17, 6:41 PM
    Better to borrow short term. Higher interest rate but paid back sooner and less overall.

    Even better of your mortgage allows you to borrow more and then overpay to bring the extra debt down quickly. Low interest paid back faster is the most MSE.
    Everything that is supposed to be in heaven is already here on earth.
    • phillw
    • By phillw 10th Sep 17, 7:30 PM
    • 806 Posts
    • 400 Thanks
    phillw
    • #3
    • 10th Sep 17, 7:30 PM
    • #3
    • 10th Sep 17, 7:30 PM
    What would you MSE'ers do?
    Originally posted by pioneer22
    I wouldn't spend £20k on renovating it before moving in. However if you must do it, then keep the cash on hand.

    Reducing the mortgage payments and then getting an unsecured loan will cost more than £77 a month. You can overpay on your mortgage anyway, so you can pay back the extra 20k you borrowed on your mortgage at your own pace.
    Last edited by phillw; 10-09-2017 at 7:32 PM.
    • Red-Squirrel
    • By Red-Squirrel 10th Sep 17, 8:12 PM
    • 1,622 Posts
    • 4,362 Thanks
    Red-Squirrel
    • #4
    • 10th Sep 17, 8:12 PM
    • #4
    • 10th Sep 17, 8:12 PM
    Cost everything up before you make any firm decisions. 20k doesn't go as far as you might think unless you have the skills/qualifications to do most things yourself.
    • pioneer22
    • By pioneer22 10th Sep 17, 9:09 PM
    • 412 Posts
    • 151 Thanks
    pioneer22
    • #5
    • 10th Sep 17, 9:09 PM
    • #5
    • 10th Sep 17, 9:09 PM
    Cost everything up before you make any firm decisions. 20k doesn't go as far as you might think unless you have the skills/qualifications to do most things yourself.
    Originally posted by Red-Squirrel
    Thanks will get a joiner for worktops and fitting the sink and plumber for the bath.

    My budget is £14000 for tiles, furniture, kitchen, hob, oven etc.

    Leaves me 6k for trades and any unexpected costs. I can tile/ fit skirting/put the kitchen up / shelves/build furniture.

    Terrible at painting though.
    Last edited by pioneer22; 10-09-2017 at 9:13 PM.
    • steampowered
    • By steampowered 10th Sep 17, 9:17 PM
    • 1,685 Posts
    • 1,611 Thanks
    steampowered
    • #6
    • 10th Sep 17, 9:17 PM
    • #6
    • 10th Sep 17, 9:17 PM
    If you need to borrow, you should borrow at the cheapest rate possible.

    Your mortgage will almost certainly be a much cheaper way of borrowing than getting a short term loan. So, you should put it on the mortgage.

    Also, putting it on the mortgage gives you more flexibility to borrow short term if it costs more than you expect.

    You can always overpay your mortgage in future to remove that extra £77 a month over 35 years.
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