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£50k Loan for Home Improvement

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I'm looking to carry out a single story extension which have estimated will cost £50k.

I'm looking to find out the best way to finance extension.

We have a mortgage of £270k while our property is worth approximately £340k.

I earn a salary of over £90k.

I have very little in savings (approx £10k) which I don't really want to touch.

What type of loan should we go with? Can I take out two personal loans for £25k each?

I'm looking to pay the loan back over 7 years.

Thanks!
«13

Comments

  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Speak to your existing lender first.
  • Tixy
    Tixy Posts: 31,455 Forumite
    You are unlikely to get accepted for 2 personal loans totalling £50k.

    Your savings are probably not earning as high an interest rate as you would pay on a loan, so I would possibly rethink not spending them.

    Obviously you are already at 80% loan to value but usually a mortgage increase/ secured loan would be the most common way to fund an extenstion. Have you spoken to your mortgage lender?
    A smile enriches those who receive without making poorer those who give
    or "It costs nowt to be nice"
  • Unfortunately my existing lender (Bradford and Bingley) are no longer offering new loans since being nationalised. I also do not want to change my mortgage as I am on a good rate (2% above BoE).
  • Tixy wrote: »
    You are unlikely to get accepted for 2 personal loans totalling £50k.

    Your savings are probably not earning as high an interest rate as you would pay on a loan, so I would possibly rethink not spending them.

    You're right about not getting much return on the £10k, but for me that's emergency cash which I like to know is available should we require it for any reason.

    Thanks!
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    flat_broke wrote: »
    Unfortunately my existing lender (Bradford and Bingley) are no longer offering new loans since being nationalised. I also do not want to change my mortgage as I am on a good rate (2% above BoE).

    Doubt you'll get unsecured loans of that value.

    Secured loan on the property would be expensive.

    Unlikely that you could remortgage to a £320k mortgage takes your mortgage to a very high LTV.

    Pay down your mortgage and build some more equity.
  • Thrugelmir wrote: »
    Doubt you'll get unsecured loans of that value.

    Secured loan on the property would be expensive.

    Unlikely that you could remortgage to a £320k mortgage takes your mortgage to a very high LTV.

    Pay down your mortgage and build some more equity.

    Building more equity will take a fair amount of time. It's a shame that secured loans aren't more competitively priced as I have enough spare cash to afford the monthly repayments but dont want to pay circa 11% and more that many of them are offering..
  • Tixy
    Tixy Posts: 31,455 Forumite
    If you do take a secured loan at a reasonably high interest rate now once your extension has been built you may be able to remortgage to a more competitive rate. And an unsecured loan likely wouldn't be cheaper anyway (even if you could get a loan for say £25k of it).

    Obviously you are slightly limited if you don't want to switch from your existing mortgage lender - but it may be worth paying a higher interest rate on £11k than lose your good deal with them. At some point if the B&B deal becomes less competitive you could always try shopping around to remortgage the whole lot then.

    Alternatively could you delay the extension for a couple of years and significantly boost your savings that way? what can you save a month towards it? £750? could you save more than that on your salary?
    That plus with your existing savings would mean you'd then be looking at borrowing half the original amount.
    A smile enriches those who receive without making poorer those who give
    or "It costs nowt to be nice"
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    flat_broke wrote: »
    Building more equity will take a fair amount of time.

    You have a salary level that most people can only dream of. Ultimately its personal choice as to what ones priorities are.
  • Thrugelmir wrote: »
    You have a salary level that most people can only dream of. Ultimately its personal choice as to what ones priorities are.

    I have an expensive wife.
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
    Holiday Haggler
    edited 28 January 2014 at 12:03AM
    flat_broke wrote: »
    I have an expensive wife.
    Who want's an extension ASAP?

    BTW - it only took me a few minutes to find someone offering a £50k loan at 8.9% over 7 years... works out at £793.24 per month
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