Hello and question about secured loan figures quoted by a broker

Kalessin

Sncjw said:

What is it exactly that needs doing? If it's over due for many years why can't you wait longer and do it in stages.I wouldn't want to pay an extra 10k on something that may also go over budget. Often renovations cost more than you think. 

Thanks @Sncjw I want to develop a working / covered space in the garden - as well as making better use of what is basically a messy green space this will really create a lot of great options, especially with the likelihood of working from home for the foreseeable future. 

So as mentioned above it's not really something I can do a bit at a time, and I don't want to wait 5 years or more (during which time my employment window and credit options other than equity release will reduce).

Good point about potential additional costs - I am trying to give myself a small margin but this is always a balance - should I ask for more?  I have quotes and options so this seems reasonable, but there is always a bit of risk!

Judging by the responses here obviously there is a perceived need to really stress the risks of using credit, the benefit of paying with existing assets, and the potential pitfalls of any offers or choices, and that any absolutely non-survival expenditure should really be considered very carefully.  So I'm here, and that's what I am doing.  I do appreciate the explanation of the APR model and also the balance transfer implications as illustrated above.  Hopefully here at MSE I can get insight into the different credit vehicles to make the best decision, but that decision won't be "don't do anything", since it's clear credit windows are inevitably narrowing with age and other factors - and even I live like a monk and save for 2 years I won't be in vastly better position, I'll just be 2 years older and with a shorter credit leash. 

At the moment I'm considering leaning away from the 12 year secured loan option and more towards a rolling program of 0% credit cards, but that does provide some other uncertainties and higher maintenance.  Equity release is still on the table but I'm not sure if it's more beneficial now or later, as it's almost the only option that improves the older you get!  If I could get slightly better rates or terms on an unsecured loan that still has some appeal, but there are only a couple of offers there.  Remortgaging might be good but the closer you get to retirement the harder it gets to find something that works in terms of affordability.  And all of this in the context of my credit and financial standing as it is now - great credit score, no missed payments, low LTV and utilisation BUT not huge margins of cashflow.  Hence my ruminations 🐮

Sncjw

Work in your garden can be done in stages. It's not like essential to keep a roof over your head like structural problems to a house. 

You said it's way overdue anyways so I don't see what the problem is to wait a bit more. 

I wouldnt go for a higher loan as you will be paying even more out. Also what is your income? Have you got any other debts.

I know you want it done as a reward but I wouldnt get into debt for 12 years as a reward. You will be under stress to pay tbe loan off for 12 years. You say that you don't want to wait 5 years when your employment window shortens. But say you retire or lose your job how are you going to afford to make the repayments. You could lose your job at any time and lumbered with a debt for 12 years which will cause you financial stress. If you do it in stages where you can save and do the works with the money you have, you won't have that stress of paying for something you can't afford. 

Kalessin

Sncjw said:

Work in your garden can be done in stages. It's not like essential to keep a roof over your head like structural problems to a house. 
You said it's way overdue anyways so I don't see what the problem is to wait a bit more. 
I wouldnt go for a higher loan as you will be paying even more out. Also what is your income? Have you got any other debts.
I know you want it done as a reward but I wouldnt get into debt for 12 years as a reward. You will be under stress to pay tbe loan off for 12 years. You say that you don't want to wait 5 years when your employment window shortens. But say you retire or lose your job how are you going to afford to make the repayments. You could lose your job at any time and lumbered with a debt for 12 years which will cause you financial stress. If you do it in stages where you can save and do the works with the money you have, you won't have that stress of paying for something you can't afford. 

Er, thanks Sncjw 🤷‍♀️ So your advice is:

• It's not essential
• Wait a bit longer
• Don't go for a higher loan
• Don't get into debt (range of risks/reasons/stresses)
• What happens if things go wrong?

I hear you but I already did that thinking process before coming here and asking for advice.  Maybe if I hadn't used the word "reward" it would be easier to avoid these responses.   How about this:

1. I have worked for nearly 40 years, managed money, raised a family and have a home. There is a project I have been aiming to do for a while which I want to do before my earning and credit facilities run out.  
2. A very slow process of paying for this project bit by bit over 7 years means that for a further 7 years I won't get any benefit from scrimping and saving, and when I do I will be 7 years older and less able to enjoy it, and just generally have less access to credit if I need it.  I don't want to defer my quality of life until I have 7 years less to play with if I don't need to.  
3. This seems like an opportunity for good tactical use of credit to improve quality of life.  So I'll go to the MSE site and ask for advice on some of the offers I'm getting.

 The "what if" scenarios apply to anyone at any point in life, you could say the same thing about someone age 25 getting a credit card - say you lose your job, you don't need the extra stress etc.
 
I was actually expecting some clever tactical advice on optimising different credit vehicles, perhaps some hidden pitfalls to avoid, or completely new approaches.  So having now had the "don't do it" or "hard cash" option 😉,  I look forward to any further tips and tricks from any MoneySavingExperts 🎅

kimwp

Kalessin said:

 The "what if" scenarios apply to anyone at any point in life, you could say the same thing about someone age 25 getting a credit card - say you lose your job, you don't need the extra stress etc.

Yup, and they'd get exactly the same advice on here. (Assuming you are meaning going into credit card debt, rather than paying it off in full each month.)

DrEskimo

I suspect because many people offering advice to you have also provided advice to countless other members who have come on here to discuss ways to get rid of high levels of secured debt on variable rates that they can no longer service. For many, if not all of them, the money did little to improve their quality of life, but instead reduced it.

Kalessin

DrEskimo said:

I suspect because many people offering advice to you have also provided advice to countless other members who have come on here to discuss ways to get rid of high levels of secured debt on variable rates that they can no longer service. For many, if not all of them, the money did little to improve their quality of life, but instead reduced it.

Thanks @DrEskimo point taken.  I am not really comfortable with the secured loan option for all the obvious reasons (and the proportion of fees and interest regardless of early repayment or overpayment), and my initial question here was really just drilling into that deal - I'm not going to do it, at least for now. 

Unfortunately the challenge is finding those more comfortable finance options, at least with my circumstances.  The lender algorithms more or less channel me into higher-interest short term unsecured loans which are harder to afford, or remortgaging or equity release which both seem too much of a commitment for a relatively small sum.  Spreading money and balance transfers across credit cards works as a quick-start but who knows what the balance transfer market will be in 1 or 2 years or if I have higher utilisation?  So I am mindful that this, like many things in life, is what they call "sub-optimal" 😅 .

So all advice is welcome and I appreciate you may have seen many people falling through the safety net.  There is an option to do nothing and/or hoard a few shekels every year so that when I'm 74 I can have a nice couple of years in the garden ... but ideally I'd rather have some of that QOL now, managing that debt over the rest of my working life and thereafter as I have over previous years.  If all the general consensus of all money saving experts is never to use credit, or pay it all off every month, or every for only absolutely essential survival things, or just a bit a time, I'm listening - but still hoping I can find a way!

DrEskimo

I think a mixture of 0% purchase cards and savings is the way to go.

Get inventive on how you can close to what you want in the garden with cost cutting measures.

Unfortunately, unless you want to pay the high costs associated with those borrowing options, you either have to find additional money elsewhere (anything you can sell?) or reduce your costs...

Kalessin

kimwp said:

Yup, and they'd get exactly the same advice on here. (Assuming you are meaning going into credit card debt, rather than paying it off in full each month.)

@kimwp 🐾 Absolutely, but at 14% credit card utilisation, unsecured debt to salary at around 20%, and LTV of 15%, I'm already conscious of that, and primarily seeking to understand the market better, how the offers work, any of the pitfalls and opportunities etc. etc.
For now I am revisiting Equity Release as a longer-term option although I'm sure it's a terrible idea 🤣.  Remortgaging doesn't look very favourable to me now as the age window compresses the repayments and puts the squeeze on affordability.  I got provisional offers for unsecured loans from the big lenders with APRs well above advertised "indicative" rates, which implies that the algorithm is also squeezing me on age and affordability.  0% card offers are still on the table, I'm wondering whether tactically it works to consolidate and then switch, so food for thought ... !!

Kalessin

DrEskimo said:

I think a mixture of 0% purchase cards and savings is the way to go.
Get inventive on how you can close to what you want in the garden with cost cutting measures.
Unfortunately, unless you want to pay the high costs associated with those borrowing options, you either have to find additional money elsewhere (anything you can sell?) or reduce your costs...

Sounds good @DrEskimo 😎 ... Yes, I am drawn to a spread card solution although it requires a bit more hands-on maintenance: I've asked the preferred supplier how much of the materials/parts I can buy direct since the labour costs are actually not the majority.   I'm also considering relocation longer term, and ...  actually I still have a spare, perhaps slightly worn kidney🙄