How to fund home extension.

capstain411

Dear all,

I am currently mortage free. House is valued at approx £460k. I have gone with lowest estimate based on past sale prices and identical properties.

Me and wife both mid 40s are NHS empolyed. Our household income is around £155k.

I earn another £40k per year as locum. But this gets paid into my limited company. Limited company has £147k in cash.

I want to extend my property. Need £180k including contigency. This is our forever property. We are well established in this area and both children have education mapped out locally with no need to move.

I have £260k in stocks and shares ISA. I have saved £130k in cash savings for extension.

I need 50k to plug the deficit.

I dont want to ideally dip into my stocks ISA ( I am not in negative positions as I have very conservative investment approach). So stocks ISA can be liquidated without incurring any loss.

Will taking a fixed rate mortage make sense to fulfil this gap, compared to

a) Liquidating isa ( no my preferred option) but i might be wrong.

b) withdrawing money from limited company paying divident tax and income tax.

I currently dont have any debt. Our outgoings are manageable.

I hope I am not coming across as a snob. I am fortunate to be in this position through savvy financial decision and pure hard work.

I love my work and every single penny is hard earnt.

Newbie_John

Why would you need to liquidate S&S ISA of you only take 20% out of it? That's what I would do - withdraw some and carry on with the rest.

capstain411

https://forums.moneysavingexpert.com/discussion/comment/81959055#Comment_81959055

I am still averaging 6% growth even in current environment did this even during tariff wars, conflicts and last 3 month. This is holding me back from liquidating even 20%. But whether I am not thinking this through i don't know.

Newbie_John

Whatever you decide comes with fees.

If you use ISA money you don't lose your 6% of potential income, try to see it as lowering risk on some of your investment by offsetting 4-5% mortgage - so you really lose 1.5%.

Anyway, that's what I would do as it's a simplest solution..

ritz55

one option could be 0% credit cards, you may not get all the credit you need but could get a fair amount out. Some good deals out there and they give you a few years to pay it back, just the balance transfer/money transfer fees to pay. Just be careful and disciplined if you do this.

poseidon1

Given the magnitude of your joint incomes and the reality of higher rate taxes on your incomes for the foreseeable future, your ISAs are a far too valuable a tax free resource to ever consider eroding, where you have other options.

Certainly, I would consider credit cards if interest free credit is on offer or personal unsecured bank loans if you wish ( for whatever reason) to remain mortgage free.

Clearly however, a mortgage is likely to be the cheaper option overall, although that does come with the hassle of the application process followed by the bureaucracy of the bank securing their debt. A personal loan by contrast far quicker and less hassle.

In passing with regard to your Company cash, have you set up a company funded SIPP to invest some of the cash and provide additional private pension accessible before your normal NHS retirement age? I appreciate however, that your NHS pension may by itself provide you with the maximum TFC permitted under current pension rules

In any event given your other options, whatever you do leave your ISA alone and continue building it annually as much as you can, your future self will thank you for it.

MWT

https://forums.moneysavingexpert.com/discussion/comment/81959808#Comment_81959808

If it is a flexible ISA there is still room to draw from it and then put it back later in the same financial year if that gives some flexibility in timing or total amount that needs to be borrowed…

capstain411

https://forums.moneysavingexpert.com/discussion/comment/81960723#Comment_81960723

Yes it is flex isa. I don't quite understand. Say if I withdraw 50k now. Can I fund it with 50k by 5th April and not lose any allowance.

MWT

https://forums.moneysavingexpert.com/discussion/comment/81961423#Comment_81961423

Yes, you have the remainder of the tax year to put the money back in without affecting your annual allowance.

Check the rules with your ISA provider, but that is the meaning of 'flexible'.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81961423#Comment_81961423

As long as it is indeed flexible. Which provider is it ?

capstain411

https://forums.moneysavingexpert.com/discussion/comment/81962384#Comment_81962384

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