C19 impact on home improvement plans

DrHyde

Hi there,

My wife and I are fortunate enough to both have relatively secure jobs; we're late 30s and a long time away from retirement; we have paid off our mortgage.

And: we do have relatively concrete plans to start a major home-improvement job that'll cost about £150k in Nov this year. To fund this we intended to take some equity out of the property - we have about £75k in savings (cash, fortunately). So the plan was to get a secured loan worth £75k and use savings worth £75k to fund the home improvement.

Here's the question: given our time horizon, should we rather take out a higher loan (e.g. £100k or even the full £150k of the home improvement job) and invest much more for the long term (in addition to retirement, there are the children's ISAs and SIPPs we could put money in)? IMO, this would make sense if access to debt was cheap as I expect it to be - and if (though with much risk) long term investments are likely to grow.

Or would you rather do the opposite: save as little for long term now and accumulate as much cash as possible so that ideally the secured loan is for a very small amount only? If so, why?

I'd appreciate your thoughts.

Best wishes and keep safe,

DrH

Thrugelmir

Not a question for the mortgage and endowment forum. 

DrHyde

Oh - I thought it was because I consider this a question about remortgaging. Which forum is better?

Grabs39

You might want to look at the savings and investments board.

My understanding is that the question boils down to “should I borrow money, secured against my families home and invest it”?

If you do it over many years then your return might be in excess of your mortgage interest. Or it might not.  You need to weigh the security of being mortgage free against potential income.  But yes, debt is currently cheap.

Personally, I would not borrow the money, then save or invest what you would have been paying in mortgage payments.

dimbo61

Your plans depend on several factors.
First well done on clearing the mortgage in your late 30,s 
However you then talk about kids and extensions.
Without seeing your home, location, room for extensions, house prices nearby it would be a guess if spending thousands on adding floor space would be worth the hassle or just moving to the perfect family home !
If you do go down the route of building work then consider an offset mortgage for the full amount needed and offset your savings ! ( This money can be used if you go over budget )
Do you want to live on a building site for 8/10/12 months.
How much room do you have to extend to the side or into the rear garden or up into the loft ?
So many questions

dimbo61

PS getting plaster is really difficult at the moment and so will many other building materials.
Guess you at the thinking about it stage but you need to sit down with your other half and decide what you both want to do.
Extend or move