Loans for Home Improvements

Fuzion

I am borrowing from my mortgage provider to pay for a new roof, using a 16 year loan at 4% (fixed for 5 years). My quotes are coming in at between 8 and 12K.

Do people normally borrow a bit extra in these situations to have access for contingencies and also just to have some extra cash to spend?

I've been approved for 15K but could reduce this to 10K if I thought this would be enough. But the difference in monthly payments is only about thirty quid.

MEM62

From the forum header. "Remember MSE's stance on loans: 'borrow as little as possible, repay as quickly as possible'."

Do people normally borrow a bit extra in these situations to have access for contingencies?

Paying interest to have a contingency fund sitting around is hardly financial prudence.

Fuzion

Yes that is my instinct as well. Was just curious what other people do when they are arranging borrowing when their idea of the cost of the work is 'provisional'.

MEM62

I would not borrow any more than you absolutely have to. But that is only my opinion and I appreciate that others may make different decisions.

On the subject of an emergency fund in general - not having a reserve or emergency fund causes financial distress for many. When faced with an issue (new boiler, car repairs) they borrow. Well if you can afford repayments, you can afford to save so by getting into the habit of building up a fund for these situations you can avoid getting into debt and paying interest when the occur. People tend to see these as 'unexpected' expenses but they are not. Your car will break down and, at some point, need replacing, your house will need repairs, your white goods will pack up at some point. Whilst the timing is not predictable, the events are to be expected.

Fuzion

Yes I run a float in my finances normally (mainly cos I'm self employed) but I meant contingencies with this job, e.g. if they quote me 9K and then find some other issue that needs addressing e.g. a rotten timber or dodgy gutter.

Chappers27

https://forums.moneysavingexpert.com/discussion/6654543/loans-for-home-improvements

I have just done a similar thing. However, I did not borrow more than I should, and any additional monies will go onto paying other immediate debt (loans, credit cards) or will go back on the mortgage as an overpayment.