Adding value?

ElkyElky

Hello

I own a 4 bed house outright with a value of £180k. I was accepted for a £11k unsecured personal loan today and just waiting on the paper work coming through for my signature. At this moment, I'm not 100% sure if I plan on accepting the loan so I'm toying with ideas on what would be best to use the loan for (if I did accept it).

Cars, holidays blah blah... to me isn't worth getting in to debt for, especially a considerable amount like 11k.

The best thing I can think of is using it to increase the value of my house. I've lived in my house for about a year and a half, and my vendor had quotes to have a garage built which was coming in around the 9k mark. A garage would seem like a good idea provided it increases the house's value beyond what it costs to build and if I'm lucky, the interest on the loan too.

Is there any other improvements I could do that may possibly increase the value beyond what it costs? Conservatory, new kitchen, block paved drive etc? Just trying to think of the most worthwhile way of using this money before I decide whether to accept or decline the loan.

Obviously there are many other things I'd love to do with 11k but being tied down to this amount for several years for the sake of material possessions scares me. I'd be comfortable using it for home improvements if there is a possibility of getting the value back when/if I sell in the future.

mummyroysof3

Why did you apply for it as it sounds like you don't really need or want it tbh

abankerbutnotafatcat

1) per above, why apply for a loan if you don't need it?
2) I applied for an interest free credit card just to manage my cash flow (and get points) and got and £11k limit for 15 months.

Doozergirl

With your house value, a garage costing £9k is only really likely to add £9k, if that.

I'd consider a home improvement that you actually want. A habitable room will add more than a garage, but clearly cost more to build. Do you plan to sell the house?

I_have_spoken

The market is flat as a pancake in Scotland right now. If you are thinking of selling, a garage would make the property more sellable but you may struggle to even get £ back for each £ spent.

Idiophreak

I can only guess a lender approached you and said "would you like a loan?"

TBH, you should just have said "No." and left it at that.

You don't need a loan. You don't need the debt. And a garage almost certainly won't add 10k to value of a house.

tired_dad

Are you serious? Someone offers you an unsecured loan and you are thinking of accepting but wondering what to spend it on?

This is madness. Its not free money. You will pay it back with interest. That is why they are offering you the money. Not so you can make cash, but so they can.

Its almost certain that nothing you do will result in getting a return on an unsecured loan.

ElkyElky

Idiophreak wrote: »

I can only guess a lender approached you and said "would you like a loan?"

TBH, you should just have said "No." and left it at that.

You don't need a loan. You don't need the debt. And a garage almost certainly won't add 10k to value of a house.

No. I applied to my bank and was approved, the agreement is being sent out. I applied to see what the outcome would be. I've been wanting to make home improvements but haven't had that sort of cash readily available. I'm just trying to determine what improvements could justify the cost of obtaining a loan for.

I agree entirely with you, on that I don't need a loan. I don't need it and I can continue living as is, perfectly fine in my house without it however since it has been approved, if I could use it for a worthwhile purpose then I'll happily send back the signed agreement.

A garage, new kitchen, remodelled en-suite, an additional window, having my gravelled drive block paved... are all things I'd like to have done to my house. I've no plans on selling for the foreseeable future.

I've no qualms with getting in to debt for something such as a garage where the overall value would increase... it won't seem like 'dead money' if a 10k outlay adds an amount near that to the house's value.... but p**sing it away on something like a car or that once in a lifetime holiday just seems absurd to me.

A conservatory would be more practical due to having the additional habitable space but in my mind, it would depend on what improvement would add the most value so that I take less of a hit on the costs of obtaining a loan for it. The hit that I will take, I could consider it my payment for enjoying the new space/features... if you get my drift.

ElkyElky

tired_dad wrote: »

Are you serious? Someone offers you an unsecured loan and you are thinking of accepting but wondering what to spend it on?

This is madness. Its not free money. You will pay it back with interest. That is why they are offering you the money. Not so you can make cash, but so they can.

Its almost certain that nothing you do will result in getting a return on an unsecured loan.

What's different about my 11k unsecured loan at the approved 4.9% to use on improving my home and giving me more space... and someone say... getting a car on finance which after several years, the car will be pretty much worth no where near the original value?

I'll have paid £808 in interest and have gained some value in my house. I've spent more than that on a laptop (albeit saved cash)..... seriously.... It's fine though, I don't mind giving my bank £808 in interest for the privilege of having immediate access to 11k to benefit from right now, as apposed to the alternative of saving for the same length of time. I work hard for my monthly pay and fortunately we still live in a country where we are allowed to spend our hard earned cash as we wish.

I'm well aware that I won't increase the value of my house for the entire £11808 on which ever improvement I decide.

Idiophreak

ElkyElky wrote: »

I'm well aware that I won't increase the value of my house for the entire £11808 on which ever improvement I decide.

So don't do it! Really seems quite simple.

Take the money that you're not paying the loan with and save it.

In 2 months, you can get your window installed. A couple more months later you can sort the en-suite. A couple more months and we'll be back into good weather to have your driveway sorted.

Keep going like this and by the end of the term you can buy yourself a £808 steak supper and pat yourself on the back for not needlessly !!!!ing money down the drain.

Dan-Dan

The banks just love people like the op!