Loan for a new kitchen.

polomint_2

I have a 70,000 mortgage which we have been overpaying £500 a month, with my other halfs company pension.

We need a new kitchen.

We have worked out that we can afford a 7500 loan from sainsburys bank at 5.9% using the pension to pay it off over 16mths at 488 a month. total pay back is £7,817.28.

I have NEVER had a loan before (apart from the moratge) Am i mad to stop overpaying the morgage to get the loan? Cant see a way to getting the kitchen other wise as hubby can retire in two and a half years and then wont get the kitchen.

I don't understand APR..Will the loan stay the same payments or will it go up?

Is Sainsburys a good deal?

Will i lose out alot by not over paying the mortgage and getting the loan.

Hubby said we could save the money for two years instead for the kitchen but then things do go up. Plus wicks has great deal on the kitchen i want half price plus 25% off.

Hubby says there will be more deals!!??

Niv

There will be more deals there always are. I personally prefer to save and spend rather than spend then pay back with interest. But that is a personal choice.

For me this boils down to two things 1, what state is your kitchen really in (could it last a couple of years for you to save?) 2, you and your other half have to agree the way forward or it will just cause agro and it isnt worth arguing over a kitchen (imo).

Niv

polomint_2

oh we arent arguing, just discussing the options. The kitchen is pretty grime we inherited it two years ago ive made do as we have up dated the rest of the house over the last two years with our savings.

HappyMJ

polomint wrote: »

oh we arent arguing, just discussing the options. The kitchen is pretty grime we inherited it two years ago ive made do as we have up dated the rest of the house over the last two years with our savings.

Can you redraw your overpayments that you have made to your mortgage? That would be a much cheaper option than taking out a personal loan.

Personal loans are usually at a fixed rate for the period of the loan.

Skinto_7

Hi Polomint,

Im not sure why you wouldnt be able to get the kitchen once your OH retired...

However in terms of the loan, id say 5.9% APR if you can get it is pretty decent and you will struggle to get better, most loans are fixed at the APR advertised so your payments will be fixed at this rate with the same monthly payments every month. Just check the Loan agreement is fixed and not variable.

As it is only £7.5k you could look at funding it through 0% credit cards, this would avoid any interest charges however may be something you are not comfortable with.

As to whether your mad to spend the money on a kitchen instead of overpaying your mortgage, i would say not, if you NEED a new kitchen as you say then i would say taking a break from overpaying your mortgage for a couple of years to enjoy your money isnt a bad thing, remember your a long time dead, and as much as its important to save money and be sensible for your future, its also important to have a bit of fun when your here and get the benifits of your hard work, so if a new kitchen would bring you a bit of hapiness i would say go for it!!

pinkteapot

Effectively you will be paying £317 to have your kitchen now instead of 16 months from now. It's up to you and your hubby whether you think it's a cost worth paying. Do shop around though. The Wickes deal might look good but consumer spending is low at the moment and spending on DIY is at its lowest for years. All the shops are desperate so haggle with a few to get the best deal.

In order to be comfortable with the loan, check you are comfortably with your monthly budget. What happens if one or both of you lose your job before the 16 months are up? Can you still afford the loan repayments if that happens? So long as you have a contingency plan for how to repay it, I say go for it if it's what you want as well.

polomint_2

The £500 overpaying is our choice rather than saving hubbys pension (as interest rates are so low)that we don't at the moment need as we are still both working. how ever when he does retire we will need that money to live on so wont be able to fund a kitchen at that time.

Apples2

Years back I priced our new kitchen up. £6k was my price, until it came to moving sockets around, moving plumbing around, then she wanted different door handles, then a different sink, then different taps, then a different washing machine yada yada yada, £9.5k later we had our kitchen.

Super, never to be repeated sales are a misnomer, you will always find your kitchen on sale (have you ever seen a carpet shop without a 50% reduction deal?)

Overpaying a mortgage is a fantastic way to knock swathes off you overall mortgage cost. Overpaying £500 a Month will save you massively more than the £317 your kitchen loan will cost in interest.

By taking the loan you will pay a LOT more back on your mortgage as well as paying £317 in Interest, that said, I agree with Skinto_7 about how long we are dead for.

The decisions you face are not the norm on this board, most on here have nothing and no mechanism to repay a loan but are desperate for a new kitchen so are enthusiastically trying to grab as much as possible with no regard to the repayments.

Saving will always be the best option but if I were in your shoes, I would probably drop the repayments and go for the loan, it would at least stop her moaning!!

Time to reap some benefits for your years of financial management.

polomint_2

HAHA thanks apples2...

love this bit.

.Saving will always be the best option but if I were in your shoes, I would probably drop the repayments and go for the loan, it would at least stop her moaning!!

Im the "she" lol...but that aside your post does make sense..We have saved hard and gone with out the tip top things to be where we are now...

We are awaiting a fitter next week to give the "real" price of fitting like you say there are always "add ons" plus we have been told that the new regs insist on an isolator for the kitchen electrics which is going to add more to the cost. We have a savings contingency for the extras.

We have been good and already knocked £5'000 off in cash over payments..

Ive researched the loans and this was the best amount to borrow over the shortest time with the least interest.

Plus I do all the cooking so i deserve it...lol

Though i have read in a mse blog that sainsburys don't always give the deal you are going for. Anyone tried for one recently?

Hubby wanted to do the loan over a longer period paying back a bit less... but this would be about the same amount we where over paying on the mortgage anyway... taking quicker to pay it back thus less intrest

pinkteapot

If you take the loan out over a longer period, you'll pay more in interest over the life of it.

The benefit of having it over a longer period is the flexibility. If money does get tight for some reason you've got a smaller repayment to meet.

Skinto_7

Polomint,

Be sure to get fitting quotes from a few fitters, normally the fitters supplied by the kitchen supplier are very overpriced!!