Home Improvement Funding?

clrey

We bought our first home June 2021...It is a doer-upper. We have made the upstairs into a flat for the time being and are living up there. We had some cash to spend on renovations initially but it has quickly been spent... so we need a lump sum to get the downstairs finished and liveable. We also want to build a workshop in the large garden. Estimates are in the region of £20k for both. 

Can anyone suggest the best way to fund this? Should we get a personal loan or should we go back to our mortgage provider and see what we can do there? 
We have a 90% LTV 2 yr fixed mortgage on the property, but we bought it for a great price and I am sure it has gone up in value even in the short time, and with the work, we have done so far. 

We are both FT Employed with good credit. Any suggestions welcome!

FreeBear

A mortgage will offer lower interest rates than an unsecured (personal) loan. But your home would be at risk if you failed to keep up repayments. That said, interest rates for personal loans are pretty low at the moment, so there may not be that much difference between extending the mortgage or taking on a loan - Your mortgage provider or broker would be best placed to advise.

One thing to bear in mind - Personal loans will be (generally) fixed rate of interest where as mortgage rates could go up a fair bit over the next few years.

Ebe_Scrooge

I would agree with the above wholeheartedly.  Perhaps just one thing to add - if you were to get a further advance on your mortgage, the interest rate will likely be pretty competitive.  But how much will it cost you overall, if you're repaying the loan over 20 years instead of just 3 or 5?

I know in the past I did a similar thing, and was able to get a loan added onto the mortgage, but the additional loan only ran for 5 years - so it worked out the cheapest way of doing it.  I'm going back well over 20 years here, though, so I don't know if such an arrangement is still offered.  But it's just something to bear in mind when you're doing the maths.

clrey

Thanks both... much appreciated. Sounds like I need to make some inquiries and go from there. 

FaceHead

Get some credit cards. As a first time buyer with a do-er up-er I was shocked that as many credit card providers as you can name were all willing to offer me £10k+. From each provider. 

You'll need to be careful as obviously the interest rates will shoot up after the interest free period, but some credit cards will easily allow you to borrow £20k with 24 months interest free. Even better than adding it to the mortgage. 

You can use the cards to live, and save your whole salaries (minus the mortgage payment) and you can buy materials (kitchen?) on the card(s). Then you'll need to direct your salaries at paying down the cards before the end of the interest free periods. 

Start with the eligibility checkers for the best cards of the mse 0% guide, or try to mbna eligibility checker as that one will give you a feel for the limits providers might offer you (but you probably don't want the mbna card...) 

grumbler

Home improvement loan. My friend managed to get one recently at a rate similar to mortgage rates.