£20000 Loan

tea_n_toast

Hi

Is £20000 over 5 years at 7.9% awful?
My credit history is probably not quite as good as average and I've been preapproved for this with Shawbrook.

It's for home improvements and the plan would be to remortgage down the line and pay this off.

Thank you

[Deleted User]

If it's the best you can get, then it's good.

Whether you can afford it is up to you. Don't rely on future remortgaging.

tea_n_toast

Thank you. The payments are affordable. Home improvement is top on our list and we wont be changing the car or booking any fancy holidays until it's done. Even if I had to pay it for the full five years it would be ok. Thanks again.

dealer_wins

Food for thought, if a £350 monthly payment is affordable, you should have built up savings of £4000 a year. If not you will suffer a drop in lifestyle at the very least.

dresdendave

dealer_wins wrote: »

Food for thought, if a £350 monthly payment is affordable, you should have built up savings of £4000 a year. If not you will suffer a drop in lifestyle at the very least.

This an excellent way of looking at whether a loan is affordable.
OP do you have a spare £350 left over every month? If not, what spending will you be cutting from your monthly outgoings to generate this money?

tea_n_toast

Thank you!! I definitely do have that left over. We are currently saving for an extension and for two months (not a huge amount of time I know but hadn't really been thinking about doing things so soon) I've managed to keep my whole salary minus childcare plus a couple of DDs both months so my plan is to keep doing that until we have planning permission (I have no idea how long this takes, architect coming to do original plans on Friday). I've been told to keep at least 10% as a contingency so will save that plus a bit extra as the loan won't cover everything. We can still live comfortably and have the odd treat on my partners income. We are lucky that when moving from rented accommodation we are already making a big saving.

I'm not concerned about a drop in lifestyle because the house is our absolute priority just now. It's AWFUL and it will be so lovely to have this extension - the house as it is just now needs done too but the extension comes first. We bought the house knowing it needed done and knowing for a good few years at least it'll be house house house before everything else. Unfortunately we can't live with it the way it is for long enough to save up the money. I know that's not the attitude a lot of people on here want to hear but it's the way it is.

Thank you for your replies