Home improvement financing

firsttimebuyer_99

Hi all- not posted here for a long time!

We have been in our house for 9 years and not done very much to it. Nothing needs doing desperately but it is very dated and a bit old fashioned. I got a quote to knock through our downstairs to create a kitchen/living space, garage conversion and porch extension- came out at 100k! I contacted the bank just to see what was possible. Our income is decent, and we have little debt, but we have 2 kids in private school. Without the private school fees the bank would easily offer us the full amount, but when they were factored in, the offer dropped to £16K!

Do we have any options? I am in no way expecting to find £100K but we may have other options at around £50K. Are we likely to be turned down for a secured loan for the same reasons? We would of course ensure that we can afford the repayments. 

Astraeus

Your loan affordability will be impacted massively by such significant outgoings. Have you looked at credit cards? Get a few on a 0% deals and you should end up with a decent wedge available to you.

MikeJXE

Before you look for a loan I suggest you look for more quotes that are  more realistic than the ridiculous one you have 

Unless of course you live in London 

MorningcoffeeIV

Earn more or cut your costs.

Those are the options. Income and outgoings.

And clear your existing debt before taking on more.

grumbler

Astraeus said:

Your loan affordability will be impacted massively by such significant outgoings.

Get a few on a 0% deals and you should end up with a decent wedge available to you.

Affordability isn't a myth. If a loan isn't affordable then neither are CCs.

What when 0% ends? It's a trap.

IMHO, using CCs to finance £100K home improvements is a recipe for disaster.

FreeBear

grumbler said:

Astraeus said:

Your loan affordability will be impacted massively by such significant outgoings.

Get a few on a 0% deals and you should end up with a decent wedge available to you.

Affordability isn't a myth. If a loan isn't affordable then neither are CCs.

What when 0% ends? It's a trap.

IMHO, using CCs to finance £100K home improvements is a recipe for disaster.

Credit card APR, 20-50% depending on which one you have. The 0% interest is often just for the first 12 to 24 months. Highly unlikely that you would get a big enough credit limit to even scratch the surface of doing any serious building work.

ashe

FreeBear said:

grumbler said:

Astraeus said:

Your loan affordability will be impacted massively by such significant outgoings.

Get a few on a 0% deals and you should end up with a decent wedge available to you.

Affordability isn't a myth. If a loan isn't affordable then neither are CCs.

What when 0% ends? It's a trap.

IMHO, using CCs to finance £100K home improvements is a recipe for disaster.

Credit card APR, 20-50% depending on which one you have. The 0% interest is often just for the first 12 to 24 months. Highly unlikely that you would get a big enough credit limit to even scratch the surface of doing any serious building work.

I dunno I've got about 65k of available credit on my cards 😂 girlfriend has about 30k. depend on the person I guess. I hardly use them but any card I have seems to offer large increases quickly which seems fairly irresponsible. 

Credit can be revolved easily but you'd need a similar amount in available credit to do so, otherwise it would be like one of those bbc micro
games from 80's where you've got to get everyone over the river in the raft 

wouldn't recommend it for house reno but for stuff like a car purchase I'd take it over taking out expensive car finance 

other challenge would be having the access to cash. Some cards like mbna let you have it in a bank account but most is transfers to other cards and cash withdrawals are expensive 

FaceHead

grumbler said:

Astraeus said:

Your loan affordability will be impacted massively by such significant outgoings.

Get a few on a 0% deals and you should end up with a decent wedge available to you.

Affordability isn't a myth. If a loan isn't affordable then neither are CCs.

What when 0% ends? It's a trap.

IMHO, using CCs to finance £100K home improvements is a recipe for disaster.

I did just this: taking about 60k across 0% cards to fund a c.100k renovation. 

A lot of materials can be bought on the credit cards (kitchen, bathroom fixtures, flooring etc), but you will also live off them, and direct all you your salary minus the mortgage at the renovation.

I always had a clear plan for repaying them within their 0% periods, but as time went on I found that I was able to balance transfer them without fees and build up savings. I've now ended up with a stooze pot, and always make sure I can pay off the cards if there is no BT available. Now that interest rates have gone up, the stooze pot is doing nicely. 

Agree it's a trap for the greedy. The key is to see the trap, navigate it and not over extend yourself.

grumbler

FaceHead said:

grumbler said:

Astraeus said:

Your loan affordability will be impacted massively by such significant outgoings.

Get a few on a 0% deals and you should end up with a decent wedge available to you.

Affordability isn't a myth. If a loan isn't affordable then neither are CCs.

What when 0% ends? It's a trap.

IMHO, using CCs to finance £100K home improvements is a recipe for disaster.

I did just this: taking about 60k across 0% cards to fund a c.100k renovation. 

A lot of materials can be bought on the credit cards (kitchen, bathroom fixtures, flooring etc), but you will also live off them, and direct all you your salary minus the mortgage at the renovation.

I always had a clear plan for repaying them within their 0% periods, but as time went on I found that I was able to balance transfer them without fees and build up savings. I've now ended up with a stooze pot, and always make sure I can pay off the cards if there is no BT available. Now that interest rates have gone up, the stooze pot is doing nicely. 

Agree it's a trap for the greedy. The key is to see the trap, navigate it and not over extend yourself.

I don't see how this can work without being able to transfer (refinance) at the end. As you say, all your money goes on renovation. How can you pay 60K in two years then?

And with £60K of debt plus a big mortgage most people will find it impossible to refinance the debt.

This happened to my friend (two adults with biggish salaries and, similarly to the OP, two children in a private school). He had to borrow money from a friend to clear part of the loan to be able to re-mortgage the house.

GDB2222

firsttimebuyer_99 said:

Hi all- not posted here for a long time!

We have been in our house for 9 years and not done very much to it. Nothing needs doing desperately but it is very dated and a bit old fashioned. I got a quote to knock through our downstairs to create a kitchen/living space, garage conversion and porch extension- came out at 100k! I contacted the bank just to see what was possible. Our income is decent, and we have little debt, but we have 2 kids in private school. Without the private school fees the bank would easily offer us the full amount, but when they were factored in, the offer dropped to £16K!

Do we have any options? I am in no way expecting to find £100K but we may have other options at around £50K. Are we likely to be turned down for a secured loan for the same reasons? We would of course ensure that we can afford the repayments. 

How much would you benefit from doing this work? Would the house value increase by the amount spent? Would you suddenly be happier, etc? I know that you’re asking about finances, but you don’t have to do the work at all, and living through it would be stressful, so there needs to be a clear benefit. Your op sounds almost like you feel you have an obligation to update the house.

I’m coming at this from the opposite direction, as we have lived in this house for 25 years and done practically nothing to it.

ahmjt

@GDB2222 has very valid point - with the investment of this scale there has to be a clear benefit like increase in property value (for example a loft conversion). Bought my first place last year early and had to do 10k work (required) but filling the pinch of this additional 10k for now. As a bungalow I know its value will increase with loft conversion - but only when I have the money for it without stretching my finance that much.