Home improvement loan - need advice

Deedubs1

Hi

I'm looking for advice to see whether my plan is feasible.

Me and my partner are looking to redo our kitchen due to it being a bit of a mess, the fridge freezer were disgusting and required a new boiler when we moved in around a year ago so they all got ripped out.

Our LTV is currently around 85% so we were unable to get a further advance through Barclays who our mortgage is with.

I have a small loan of £1500 as I needed one quickly due to my car going pop a couple of weeks ago!

My plan is to now cancel this loan and do the following;

£8,000 loan over 7 years to keep repayments low(we're both on 24k secured job within NHS) with a lower APR than my £1500, pay off the £1500 and use the rest for the kitchen.

Next year when we remortgage to consider consolidating this loan(our LTV will then be around 75%) - I know that this will be more in the long run but ideally we want to keep monthly outgoings low so we can enjoy life whilst we're still in our mid twenties!

Is there any issues with this or any alternatives that would be better?

Thanks in advance.

[Deleted User]

The main issue will be asking for an additional 8k, on top of the £1,5k you've just take out. Your higher risk means you may get declined or get offered a much higher rate.

The long period will also be another big risk indicator, as it shows low affordability.

If saving isn't an option and the work is essential, all you can do is try an eligibility checker and hope for the best. But I'd try saving first.

Deedubs1

Ok that makes sense - its a shame they see it as low affordability when in fact it we're just being more careful in the long run. 
Our credit history is spot on but I agree with you that the biggest factor is them allowing it on top of another loan. 

barbiedoll

You need to be a bit smarter if you want to enjoy your life beyond your 20's. You have a large mortgage, a personal loan for car repairs, AND you're planning to get a bigger loan to pay off your small loan, and to fix your kitchen, which you then plan to add to your mortgage? I can tell you now that you'll be in for a world of pain if you have just one unexpected life event (unplanned baby, serious accident or illness, redundancy etc).

You're young, you're living in your first home, it's perfectly normal to have to live with old fixtures and fittings for a few years, especially if you'd rather have some fun first, there's nothing wrong with that. Check out ebay or FB marketplace, you can pick up a second-hand kitchen for a very small sum. Have a go at fitting the units yourself, it's just screwing stuff into a wall. Pay off the small loan as soon as you can, go and enjoy yourselves when the pubs open again, and forget about a new glossy kitchen for a while. Don't take on too many loans and definitely don't keep adding extra to your mortgage. Your wages will rise, you'll probably have more disposable cash as you get older. Don't get bogged down in debt right now, it will take over your life if you're not careful!

DrEskimo

So given that a loan is simply borrowing from your future self, you are going to tie yourself down to paying for your current car and this kitchen for the next 7yrs...what about when you reach 30s? I'm pretty sure you're going to want to do other things in the next 7yrs and that's where the issues arise....

Suddenly more debt gets added and it snowballs.

85% LTV is already pretty high so either cut back on spending and save up, try and do much of it DIY, or wait a few years till you remortgage and hope you have built up some equity.

Deedubs1

Thanks for all your advice. It’s made me rethink things and look at it it differently. If the kitchen didn’t look such a mess it would be a much easier decision. 

Emmia

I'd start working on that "emergency fund" as you shouldn't have needed a loan when the car went "pop" - savings should really have covered it. 

If you find it hard to put money aside, you could try something like Chip which takes out small amounts (anything from about £5 to £50, depending on the settings) every 4 days or so, depending on what is in your account - I've been doing it for a couple of years, and have saved a bit over £6k. I like the fact it's in a separate app to my main accounts, but the money is still easy access.

[Deleted User]

barbiedoll said:

You need to be a bit smarter if you want to enjoy your life beyond your 20's. You have a large mortgage, a personal loan for car repairs, AND you're planning to get a bigger loan to pay off your small loan, and to fix your kitchen, which you then plan to add to your mortgage? I can tell you now that you'll be in for a world of pain if you have just one unexpected life event (unplanned baby, serious accident or illness, redundancy etc).

You're young, you're living in your first home, it's perfectly normal to have to live with old fixtures and fittings for a few years, especially if you'd rather have some fun first, there's nothing wrong with that. Check out ebay or FB marketplace, you can pick up a second-hand kitchen for a very small sum. Have a go at fitting the units yourself, it's just screwing stuff into a wall. Pay off the small loan as soon as you can, go and enjoy yourselves when the pubs open again, and forget about a new glossy kitchen for a while. Don't take on too many loans and definitely don't keep adding extra to your mortgage. Your wages will rise, you'll probably have more disposable cash as you get older. Don't get bogged down in debt right now, it will take over your life if you're not careful!

The best post i've read in a long time 👍 

Standing back and putting things into perspective is always the best way forward when it comes to money matters.

macman

It makes no sense to take out an 8 year loan in part to finance car repairs. By the time you've paid that off, the car will be long gone. 
You really need at least £2K in an emergency fund for household expenses like this, rather than racking up more debt for a new kitchen. Maybe just give it a spruce up with a new coat of paint and some flooring?

sammyjammy

There is always something you can do, make a list of the issues and come up with some solutions, browse pinterest?
How much time do you spend in your kitchenn?  I bet it'll be less once everything opens up again properly!

HampshireH

Deedubs1 said:

Thanks for all your advice. It’s made me rethink things and look at it it differently. If the kitchen didn’t look such a mess it would be a much easier decision. 

So why not overhaul.

Cover the current unit doors  or pop new doors on the units and add a new worktop if needed.  Or keep your worktops and and a splashback to lift the room.

Far cheaper and if you have any actually falling apart internally just replace the carcass.

Once you start replacing a kitchen it can get expensive......like electrics which need moving/upgrading. The new floor etc then decorating.

You can make it better without making it new if it's a cosmetic issue