Paying Off or House Improvement? Please help.

Penny_Farthing_2

Hi. This is my first post and I'm not sure if it's in the right place, but here goes.
We have a 163,000 mortgage on a house worth about 400,000. The house is liveable but needs renovation including stuff like rewiring, kitchen, boiler, drive etc etc We have 3 boys aged 4,9,11 and we have 3 double bedrooms and a bedroom you can fit a single bed in but that's about all. Borrowing K20 extra would get us an extra bedroom for boys and en suite for me (sharing with 4 men at mo). Borrowing K40 would get us that plus all the other stuff that would spruce up the scruffiness. It's our last family home barring financial disaster. There's not too much spare cash floating round so we'd be working till later. Me 42 OH 39. Current mortage due to pay off by about OH 55. Could be earlier if we transfer to have overpayment facility. Also, all kids look like college material and we have no idea what's involved with that financially.
Lifestyle / nice home with space priorities are even stevens so what on earth can we do to help us make up our minds?

Has anyone faced a similar problem or can anyone put a sense of perspective on this as our indecision is driving us bonkers!!! Please help.

roswell

If youre going to have to borrow to do the work you want then i assume you will need to borrow to pay off ???? seems strange to em maybe iv missed something.

silvercar

Currently your paying off £163k over the next 16 years. Add £40k to the mortgage and add 5 years to aim to pay it off by time OH is 60.
Payments won't be very different (though I accept you'll have a mortgage for longer) but you will have had 21 years living in a nice family home rather than an OKish one.

Penny_Farthing_2

Thanks, this is true and certainly a thought to consider. V helpful.

Gingham_Ribbon

In order to borrow £40K, have you worked out how much it would actually cost over the years? Would you be able to get the work done over the next few years by saving hard and doing it bit by bit? It would be much cheaper.

roswell

Borrowed £40,000.00
Interest @ 5% £23,355.75
£63,355.75 -- This is the total you will pay back @ 5% over 20 years .....

Penny_Farthing_2

Yikes! That's a huge amount. BUT we are v. naughty and have hardly ever saved for anything. Given the amount of time we'd take to save, we'd never get the house done and we've been here 5 yrs now (did a bit when we moved in tho) However, seeing it in raw figures makes me lean towards borrowing K20 for the big work and saving for the rest in smaller chunks. Also what do you think will happen to interest rates? We'd be stuffed if they went too high.
This is really helping to clarify things - please keep it coming!

Thefunkygibbons

Might it be worth taking a debt free method and post a SAO here so we can see whether we can squeeze your monthly outgoings to find the extra money that you need.

With the kitchen, is there a low cost route such as replacement doors for the units rather than replacement?

Penny_Farthing_2

Thefunkygibbons - please what is an SAO? Also, kitchen really has to be ripped out but we're getting a v. good deal on B&Q job and having builder to fit it. But why is it I have an unerring ability to go straight to the most expensive thing in any shop without even glancing at the price tag!!

Thefunkygibbons

A SOA is a statement opf affairs

At the top of the screen is Martin's budget planning

It is a great way of ensuring you know where all the money goes, the board is then able to give advice on what options you have to trim expenditure or increase income to provide the money to throw at the debts

exil

With inflation at 3% the 63k over 20 yrs is actually worth in today's money about 48k.

Borrowing over a shorter period eg a separate secured/unsecured loan would reduce the cost but would mean higher monthly payments.

A 4 bed house would IMO be adequate for a family of 5 - pardon me while I go into "in my day" mode but 5 of us lived in a smallish 3 bed house back in the 60s. Remember that within a few years the kids will (one hopes) no longer be spending much time at home. In fact you'll have the devil's own job getting them to spend any time at home at all.

College costs? Could easily be in the 10s of thousands depending on how student finance rules change over the next few years. Hopefully the kids themselves will be able to supply most of that via student loans or vacation work. There is some assistance given for fees at below about 35k a year parental income.

My personal choice would be not to extend - just do essential work eg wiring and so on. But it IS a personal choice!