Mortgage or Bank Loan?

r.jenkins36

We are 70 yrs old, have a pension pot for drawdown and a few small pensions that mean we can manage just fine.  I also still work part time which gives the icing on the cake.  Mortgage all paid off and house worth approx. £380k.  We would like a small building extension cost around £12k but don’t have the cash to hand so are looking to borrow over 5 years.  I don’t want to pull cash out of the pension pot as this would put me into the higher tax bracket.

Mortgage or bank loan? Or is there a better way?

Suggestions please.

Thank you MSE Forum.

DrEskimo

How far are you along the process for the extension? In my experience it takes time to find an architect, takes times to draw up plans, takes time to submit, takes time for this to be approved (whether full planning or permitted development), then takes time to find contractors, takes time before they start, and then the build will be over a number of stages.

In all, I would not apply for anything yet, tighten your belt and save over the next 12-18months whilst you set everything up and see if you can do without any borrowing at all. If by the time you have everything set up, you need another year or two to save to pay the full cost, then simply wait, build up the savings and then go ahead with the build.

Worse case is in a years time you apply for borrowing but on a reduced amount.

retiredbanker1

IMO most mortgage lenders these days have a minimum loan of £25k or so - therefore a personal loan would seem to be your better option if you do not want to use savings.