borrowing money to buy a parking space

maxthepolarbear

Background: I bought a new build two years. At the time of purchase there were no parking spaces available. Now I have been told by the developer that there would be an option for me to buy a parking space in the adjacent block in the same development at £25,000.

1. I will need to borrow money for that. I'm wondering if this would fall under "home improvement" for the purpose of the loan?

2. My partner and I could probably put down a deposit of £5k so will probably need to borrow around £20k. Are there joint loans available? At the moment I think it is cheaper for us to each take out a £10k loan than for one of us to take out a £20k loan.

3. I guess it would be cheaper if I borrow additionally from my mortgage (currently at 1.88%) and then try to make the overpayment that is equivalent to the cost of the parking space over the same period as the loan (say 3-5 years). Am I right?

I'm also hoping to buy a car in future for which I probably will need to take out another loan so am trying to be wise with not taking out too many loans...

takman

Do you currently own a car?. £25,000 seems ALOT of money for a parking space so I'm assuming you live in a city and there is no parking available in the area?. Do you really need this space considering you need a big loan to be able to afford it. Plus if your planning on buying a car in the future you should start saving for it now so you don't need a loan. But to answer your questions:

1. I wouldn't say it's home improvement consider its a plot of land away from your house.

2. Look at the loans guide on this site.

3. 1.88% is less than 3% so it's cheaper to add to your mortgage BUT then it adds to your secured debt which could put your house at risk if you get in financial difficulties in the future.

maxthepolarbear

takman wrote: »

Do you currently own a car?. £25,000 seems ALOT of money for a parking space so I'm assuming you live in a city and there is no parking available in the area?. Do you really need this space considering you need a big loan to be able to afford it. Plus if your planning on buying a car in the future you should start saving for it now so you don't need a loan. But to answer your questions:

1. I wouldn't say it's home improvement consider its a plot of land away from your house.

2. Look at the loans guide on this site.

3. 1.88% is less than 3% so it's cheaper to add to your mortgage BUT then it adds to your secured debt which could put your house at risk if you get in financial difficulties in the future.

Thanks takman. No I don't have a car and yes it's in London. It's in a borough where the council has stopped giving our parking permit for residents in new build flat to reduce congestion. So I won't be able to apply for a council permit.

I do work outside London and spend a lot of time commuting. Having a car will definitely help.

Thanks for your input - much appreciated!

csgohan4

you may need more to cover solicitor costs in ensuring the deeds are correct e,t,c

Herzlos

Might be worth talking to a mortgage broker and see if you can get a mortgage on it - it's still a plot of land with an asset value.

WillyWonga

Getting a personal loan at £20k will be hard very hard as it will be unsecured and you will have to convince the bank and go through hoops you are credit worthy.

Best option 2 x £10k loans by you and partner at separate banks. say it is for home improvements don't mention for parking space as will turn a few hairs!!

Or speak to developer and see if they will finance the parking spot for you, worth a try.

leespot

WillyWonga wrote: »

Getting a personal loan at £20k will be hard very hard as it will be unsecured and you will have to convince the bank and go through hoops you are credit worthy.

Best option 2 x £10k loans by you and partner at separate banks. say it is for home improvements don't mention for parking space as will turn a few hairs!!

Or speak to developer and see if they will finance the parking spot for you, worth a try.

£20k isn't always hard to get to be fair - all depends on income and outgoings. I picked that much up with Sainsburys (unsecured) at 2.9% across two loans in my name, the only question they had was did I want to combine the two loans.

Shakin_Steve

WillyWonga wrote: »

Getting a personal loan at £20k will be hard very hard as it will be unsecured and you will have to convince the bank and go through hoops you are credit worthy.

Best option 2 x £10k loans by you and partner at separate banks. say it is for home improvements don't mention for parking space as will turn a few hairs!!

Or speak to developer and see if they will finance the parking spot for you, worth a try.

It is a piece of land, though. Maybe a specialist broker could get you a loan secured on it.

foxy-stoat

If this was added to the deeds to the property then surely it will make your property worth more so speak to your lender.

If it is treated as a seperate piece of land not linked to the house deeds then it may be more difficult.

In either case if you are offered land then you would be a fool not to buy it, assuming it is "fairly" priced....not sure "London" and "fairly" can be in the same sentence.

Andyjflet

Would probable be leasehold also so make sure you check the length of the lease.

armchaireconomist

£25k for one solitary parking space? The world has gone mad. If you've survived thus far without it do you REALLY need to spend that amount on a parcel of land with about £500 worth of tarmac?


Have you considered "renting" someone's drive while they're out at work? I hear that's quite common in cities. If you fancy the move up North i'll sell you a parcel of land with a drive and shed, space for 3 cars for half that.