Need £18k loan for new kitchen - best option?

orange71

We need a new kitchen and have been quoted £18k. We don't have that sort of money lying around so will need to borrow.

The only debt we have is mortgage of £50k currently paid interest only @ 5.49% fixed for next 4 years with 10 years in total left to go. Capital will be paid off by endowment which is over shooting by £2700 @ 4%, £12700 @ 6% and £27000 @ 8%. Their view is 6% is reasonable to expect, so looks like in 10 years we will have c. £13k to play with.

We have c. £4k rainy day savings we'd rather not touch in case of redundancy/illness etc.

Question is how to raise £18k? We can't afford high monthly payments as cash flow not great for the foreseeable future so would rather pay less monthly over a longer period of time even if it means paying more in the end (i.e. it's not the cheapest option). We could prob afford £150/month.

Our thoughts were add to mortgage, repay as interest only and use endowment to mostly pay off capital in 10 years and if it's not quite enough (which it probably won't be) we can scratch around find the few thou we'd be short.

Any better ideas though? Given mortgage fixed period ends in 4 years do we have other options - redemption is £2700 currently, interest rates are low.... should we entirely restructure our mortgage?

Over to you clever people :beer:

Clive_Woody

Need £18k loan for new kitchen - best option?


Get a cheaper kitchen.....that is one very expensive kitchen. Go to the DIY boards on here for suggestions.

orange71

true - but it's an investment, we are planning to stay in house forever, want quality that will last. Did DIY job last time round and it lasted 5 yrs... want to do it properly this time.

Sinhanada

18k is still a huge amount. We've been pricing ours up (Admittedly for a three bed terrace) and we're looking at 5k if we do it ourselves, or 8 if we bring someone in. Either you have a very large house or you are getting the most expensive kitchen.

Have you shopped around for the same kitchen yet different suppliers \ fitters?

opinions4u

Cheaper kitchen.

Remortgage.

Home improvement loan from existing lender.

AMILLIONDOLLARS

Hope you are not using one of those inflated Kitchen companies, the old MFI clone comes to mind! Before you pay out that kind of money do an internet forum search on them!

AMD

JimmyTheWig

orange71 wrote: »

The only debt we have is mortgage of £50k currently paid interest only @ 5.49% fixed for next 4 years with 10 years in total left to go. Capital will be paid off by endowment which is over shooting by ...

mortgage fixed period ends in 4 years do we have other options - redemption is £2700 currently, interest rates are low.... should we entirely restructure our mortgage?

Ok, back-of-an-envelope calculation time, but if you can beat your current interest rate by 1.4% then you would be better off remortgaging.
So can you get a mortgage at 4.1%? I'm guessing that you should be able to. That doesn't include any mortgage fees, however, so make sure you take them into account. For the (relatively) low mortgage balance that you have I'd suggest a fee-free product rather than an ultra-low rate with high fees.

And if you are doing that then you may as well add the kitchen (if spending that money is worth it) money to the mortgage.


Note that it is difficult to get interest-only mortgages these days. Which will make your monthly repayments quite high if you switch to repayment.
How far are you off retirement? If you can extend the length of the mortgage that will bring the monthly repayments down. Obviously you can still use the endowment to pay off the mortgage (or most of it) when it matures.

If you have a low loan-to-value then you may be able to stay on interest-only.

Foxy-Stoat_3

Maybe take out 6 credit cards with zero percent interest/ low interest super balance transfer and play the juggling game for a few years.....if your on the ball you could borrow many thousands of pounds with lower interest than a mortgage, not sure about securing the low interest for 10 years though....if alls you can afford is £150 a month for £18K then you may need to save up for a few years or use savings.

orange71

thanks - 20 yrs to retirement yet so extended mortgage time period a good option. House is worth £260k so loan-to-value v. low (if I understand you correctly).

Kitchen company totally reputable - no worries on that front.

Clive_Woody

orange71 wrote: »

true - but it's an investment, we are planning to stay in house forever, want quality that will last. Did DIY job last time round and it lasted 5 yrs... want to do it properly this time.

You can get a quality kitchen for a lot less than that to be honest. If you don't mind me asking, who is that quote from?

A local independent should be able to install a really nice kitchen for a lot less than that.

closed

Deja vu

https://forums.moneysavingexpert.com/discussion/516370