Best way to save £10k for house renovations?

gwen80

Hi

My house needs quite a bit of work doing to it. I've been saving up for a few years now and have just over £10k in the bank. ~£7k is in an IF ISA that was opened last year. I'm not sure what the interest rate on that one is now, but at the time of opening it was the best. ~£3k is in a savings account with A&L with an interest rate of 0.1% :eek:

I'm continuing to save £150 per month and I need instant access to it. Should I open the best ISA I can find and move all of it into there and continue to pay in every month? Or would I be better off putting the regular payments into a regular saver or something?

Thanks

Gwenx

amcluesent

All savings are now losing value due to inflation, so you're going backwards!

As a house-owner and waged (otherwise why have an ISA?) why not just re-mortgage on a fixed-rate, get the work done now and enjoy it? Inflation is only going to get worse, so leverage is good...

Tammer

Hi,

Adding the renovation costs to your mortgage can be a bad idea as:

• it decreases the equity in your house making it less likely you'll get a good mortgage deal.
• the debt has a term the same as your mortage (lets say 20 years) so the interest can really mount up over that time - particularly when rates increase. Even if you have good intentions of paying it off quickly.
• if you become unable to pay the debt, you may lose your home.

You've been very sensible to have saved the money over the last couple of years so why do something daft now? For future savings, just look at the best buy tables on many money websites for the best rates with instant access. If you're going to spend the money soon then the interest rate becomes less of an issue. If you're not going to spend hte money in the next 11 months, then look for the best cash ISA.

gwen80

amcluesent wrote: »

All savings are now losing value due to inflation, so you're going backwards!

As a house-owner and waged (otherwise why have an ISA?) why not just re-mortgage on a fixed-rate, get the work done now and enjoy it? Inflation is only going to get worse, so leverage is good...

My mortgage is currently on a variable rate (high at 4.99%) and I'm looking for a new fixed rate at the moment.

I'm not looking to do the work immediately as I have a few other things to sort out (including health problems).

gwen80

Tammer wrote: »

Hi,

Adding the renovation costs to your mortgage can be a bad idea as:

• it decreases the equity in your house making it less likely you'll get a good mortgage deal.
• the debt has a term the same as your mortage (lets say 20 years) so the interest can really mount up over that time - particularly when rates increase. Even if you have good intentions of paying it off quickly.
• if you become unable to pay the debt, you may lose your home.

You've been very sensible to have saved the money over the last couple of years so why do something daft now? For future savings, just look at the best buy tables on many money websites for the best rates with instant access. If you're going to spend the money soon then the interest rate becomes less of an issue. If you're not going to spend hte money in the next 11 months, then look for the best cash ISA.

Your three reasons above are exactly why I've saved so hard for the last few years

At the moment, I'm off work ill, so my priority is to get better. Once I've achieved that I will look to get the work done, but I don't know when that will be. I'm leaning towards putting the £3k into the highest paying ISA and putting the £7k in the highest paying ISA that allows transfers in, but I wasn't sure if I should be considering regular savers or other taxable savings accounts?

Argh, just realised the flaw in my plan. You can only open one ISA per tax year, can't you? Damn :doh: Any suggestions?

Tammer

gwen80 wrote: »

Your three reasons above are exactly why I've saved so hard for the last few years

At the moment, I'm off work ill, so my priority is to get better. Once I've achieved that I will look to get the work done, but I don't know when that will be. I'm leaning towards putting the £3k into the highest paying ISA and putting the £7k in the highest paying ISA that allows transfers in, but I wasn't sure if I should be considering regular savers or other taxable savings accounts?

Argh, just realised the flaw in my plan. You can only open one ISA per tax year, can't you? Damn :doh: Any suggestions?

Find the highest paying ISA that accepts transfers in - transfer you're previous ISA into it and add new money at the same time for the current tax year.