Borrowing more to furnish house, bad idea?

cwc100

Hello all,
FTB buyer here, we have had an offer agreed which is less than the agreement in principle plus deposit. My other half thinks we should still borrow the full amount in the agreement in principle which would give us a bit extra to furnish the house and an emergency fund for anything that went wrong in our first year. At the moment we are budgeting £4k for fees, which leaves £3k left over in our budget after everything has been paid for. The extra we would have from borrowing the full mortgage in principle is £7k extra. My instincts are uncomfortable with the fact that we will be paying interest on the £7k, but my other half thinks it will be better to pay a little more each month to ensure that we have a safety net for when we are just starting off. We will get some advice from our broker, but I wanted your thoughts? Thanks.

Paulaviki

I'm pretty sure you can't borrow more than the amount you have offered for the house minus your deposit under the mortgage.

Owain_Moneysaver

you may only be paying a little extra each month, but you will be doing so for the next 20 or 25 years or however long your mortgage is.

There have been several discussions recently on how to furnish a house cheaply.

Wentthedaywell?

Not sure I understand. Do you mean you've made an offer on a place and had it accepted? It's less that the bank have said they'll lend you, so you are planning on borrowing the full sum of the in-principal offer?

The bank will only give you a mortgage for a percentage of the value that their surveyor assesses that the property is worth, not the full amount of the in-principle offer.

Even if you could, personally I would caution about sticking extra money on a mortgage. You will be paying interest for up to 25 years, long after the furniture has worn out, and interest rates are bound to go up soon.

Best of luck whatever you decide!

ognum

I am guessing you can only borrow a percentage of the agreed price, would you remain within this percentage if you borrow more?

OK I am now going to sound very old fashioned so forgive me! What is wrong with living within your means rather than borrowing. Why can't you get the basic furniture you need second hand, eBay, Freecycle? Why the need to get everything new straight off?

G_M

I am strongly of the belief that minimising borowing is best.

Furnish cheaply (or free via freecycle etc) in the short term and buy nicer stuff as your income /circumstances improve.

You'll save massively on interest charges.

tigsly

I'm assuming the mortgage company have agreed to lend you 100 (i'm using simple figures here!)

and that your house is 100 - your deposit is 10.. so you have 10k 'spare' .. as the bank will 'loan you' more than you need..

Personally i think borrowing more than you need... is a flase econmy - you will pay for it interest.. that said you can overpay your mortgage - and 'save' the interest...

I'd only factor in extra money -if were 'neccesary' .. e..g a rewire, damp proof work.. etc..

19lottie82

You can only borrow the price of the property minus your deposit on a mortgage.

You could always apply for a personal loan after the mortgage has gone through (before may hinder the mortgage application), but do you really want to be lumbered with more debt? As others have said check out Gumtree, you will find some excellent bargains.

cwc100

Thanks for all of your replies, I agree, my personal preference is to source things from charity and second hand shops. We don't intend on spending all the money but wanted a little in the bank in case something goes kaput. I understand it has to be a decision shared between two people, but it was interesting to hear your thoughts

MysteryMe

You could see if your families have items they can let you have?


Ebay i worth a look and even new pieces from places like The Range, Poundland, Home Bargains etc


About 20 years ago I picked up some kitchen items from a charity shop and I still use them!

Katgrit

I don't think this is a question as to whether you should do it, but whether you are able to do it. The bank will not let you borrow more than what you're paying for the house (minus your deposit). To expand on Tigsly's post above, I'm personally looking at properties worth around £100k. However my agreement in principle is that the bank will lend me £127k. Even if I buy a house for even £105,000 and put down a 10k deposit the bank will not lend more than £95,000. As much as I'd love to I can't borrow the full amount and swan off to the Maldives for a month. It just doesn't work like that.