Home improvement financing

Astraeus

What utter tosh to suggest the OP needs to make their money back for this to be a sensible decision! We earn our money to spend as we wish. If someone wants to only spend money to make money, good for them, but that's not universal.

I say that because we're in a similar boat, spending a heck of a lot on an extension (and @MikeJXE, I'm afraid the quote is far from unreasonable...quotes for similar work for us came in between £5k and £35k higher). If I can afford it, and I think it would benefit my family, to hell with the idea that it's not sensible because I won't get back at least as much.

Presumably some of you go on holiday, you know, spending thousands of pounds for experiences, memories and lovely surroundings. Unlike putting money into a house, you're guaranteed never to get that money back. And what the OP puts into their house affects them 51 weeks of the year, not the one that a holiday does.

Also, @FaceHead has it right. Putting £60k on CCs is only a problem if you don't have a realistic plan not to get bitten. It's eminently sensible if you have a plan, given the protection and cashback you can get on such major expenditure. And, like @ashe said, it's not that rare to be able to access that much credit.

OP asked for options, not to be told how to spend their money. CCs are an option.

FreeBear

Astraeus said: What utter tosh to suggest the OP needs to make their money back for this to be a sensible decision! We earn our money to spend as we wish.

Agreed.

I've spent quite a bit of money (and still need to spend more) on thermal improvements & refurbishment. It is unlikely to add to the value, and probably I won't see a return on investment in my lifetime. However, it does improve the quality of life and I'm more comfortable for it.

GDB2222

Astraeus said:

What utter tosh to suggest the OP needs to make their money back for this to be a sensible decision! We earn our money to spend as we wish. If someone wants to only spend money to make money, good for them, but that's not universal.

I say that because we're in a similar boat, spending a heck of a lot on an extension (and @MikeJXE, I'm afraid the quote is far from unreasonable...quotes for similar work for us came in between £5k and £35k higher). If I can afford it, and I think it would benefit my family, to hell with the idea that it's not sensible because I won't get back at least as much.

Presumably some of you go on holiday, you know, spending thousands of pounds for experiences, memories and lovely surroundings. Unlike putting money into a house, you're guaranteed never to get that money back. And what the OP puts into their house affects them 51 weeks of the year, not the one that a holiday does.

Also, @FaceHead has it right. Putting £60k on CCs is only a problem if you don't have a realistic plan not to get bitten. It's eminently sensible if you have a plan, given the protection and cashback you can get on such major expenditure. And, like @ashe said, it's not that rare to be able to access that much credit.

OP asked for options, not to be told how to spend their money. CCs are an option.

I did ask whether the  building work would make the op happier, and I entirely agree that it’s not just the financial aspect that counts. 

In any case, it is a balancing act. You might not want to spend a vast amount on home improvement that doesn’t produce an increase in value. But you might not insist on a commensurate increase.

FB's thermal improvements will save him money and make him more comfortable, for example. 

Presumably, if you finance the work with zero interest credit cards, you can’t be sure of being able to roll those over to new zero interest accounts in say 18 months time. Does that mean that the only safe way to do this is to be able to repay the entire amount borrowed in this way in the 18 months? 

Astraeus

Very true, there's no guarantee of being able to finance any debt in future. Look at those who maxed out their borrowing on mortgages at 1.39%...

It's about plans and then contingencies. As I said in my last post, where the OP was looking for options, CCs do provide them with some. It's for the OP to assess contingencies and assess whether CCs are a *good* option. None of us here can advise on that with the information we have. For some, £50k on CCs is a terrifying prospect. For others, it's a comfortable use of debt.

One possibility if the OP was to go down the CC route would be to leverage the increased property value to remortgage and pay off the CCs if they can't move to other 0% deals. As sure as one can be at present, £100k spent on a property even factoring in current house price depreciation, is likely to yield upwards of a £60k increase in their house price. Leverage that with a 60% deal and they'd only need £14k to clear off CC debts or to move on to other CCs. If we assume a 0% period of 18 months, that's paying off less than £1k per month and refinancing the rest at around 3.5% on current mortgage rates - not too problematic in my eyes.

grumbler

Astraeus said:

One possibility if the OP was to go down the CC route would be to leverage the increased property value to remortgage and pay off the CCs if they can't move to other 0% deals. As sure as one can be at present, £100k spent on a property even factoring in current house price depreciation, is likely to yield upwards of a £60k increase in their house price.

That was exactly my friend's plan that I mentioned above. What actually happened was that the project wasn't finished and with a  big loan (rather cheap and giving more flexibility than CCs) taken for the project he was unable to extend the mortgage. Another contributing factor was rise in interest rates and affordability issues as a result.

GDB2222

Astraeus said:

Very true, there's no guarantee of being able to finance any debt in future. Look at those who maxed out their borrowing on mortgages at 1.39%...

It's about plans and then contingencies. As I said in my last post, where the OP was looking for options, CCs do provide them with some. It's for the OP to assess contingencies and assess whether CCs are a *good* option. None of us here can advise on that with the information we have. For some, £50k on CCs is a terrifying prospect. For others, it's a comfortable use of debt.

One possibility if the OP was to go down the CC route would be to leverage the increased property value to remortgage and pay off the CCs if they can't move to other 0% deals. As sure as one can be at present, £100k spent on a property even factoring in current house price depreciation, is likely to yield upwards of a £60k increase in their house price. Leverage that with a 60% deal and they'd only need £14k to clear off CC debts or to move on to other CCs. If we assume a 0% period of 18 months, that's paying off less than £1k per month and refinancing the rest at around 3.5% on current mortgage rates - not too problematic in my eyes.

The op said that the constraint on their borrowing more on their mortgage was affordability, not the house value, so your solution might not work.  It depends on interest rates in 18 months time.

Astraeus

Well yes, though if we're talking the OP feeling the squeeze because an increase of a few hundred quid a month on a mortgage as a result of higher interest rates, then the OP ought to put the idea of the extension to bed right away because it's clearly too risky.

daivid

ashe said:

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. 

How much of your credit is at 0% and for how long is it at 0%?

Even if someone could get £50-100k at 0% using credit cards to fund a renovation project one cannot get a loan or mortgage increase to cover is a dangerous game to put it mildly. This is before considering the issue of paying trades with a CC.

GDB2222

Astraeus said:

Well yes, though if we're talking the OP feeling the squeeze because an increase of a few hundred quid a month on a mortgage as a result of higher interest rates, then the OP ought to put the idea of the extension to bed right away because it's clearly too risky.

The idea of affordability checks is to, umm, check whether people can affect something? Or, you reckon it’s just an annoyance to circumvent? 

Astraeus

GDB2222 said:

Astraeus said:

Well yes, though if we're talking the OP feeling the squeeze because an increase of a few hundred quid a month on a mortgage as a result of higher interest rates, then the OP ought to put the idea of the extension to bed right away because it's clearly too risky.

The idea of affordability checks is to, umm, check whether people can affect something? Or, you reckon it’s just an annoyance to circumvent? 

You're cool