How would you fund this?

[Kangaroobill]

We would like to do work on the house and me and DH have different ideas of how to fund it. We want an interior wall knocked down, beam installed, new kitchen, new downstairs wc, utility, all downstairs plastered and new flooring, new boiler, rendering outside and new drive for 3 cars.

We can realistically save £500-700 per month. DH thinks we should save and do it all step by step by step. I think we should remortgage and do it all at once. We have 45% equity in the house. How do people fund biggish projects like this?

YABU - save and do one thing at a time or wait until you’ve saved enough
YANBU- remortgage

We’re also in the north where work tends to be cheaper, I’ve had quotes for most of it but some I’ve gone off what friends paid. We could split bits up, for example the rendering and drive could be done together, the downstairs wc and utility could be done together, the big thing is the boiler, wall removal, kitchen, plastering and flooring that all go together as we’re making it open plan.
We’re both in stable NHS jobs too.

I would re-mortgage.

We're doing our house up "bit by bit" and living in a home that ALWAYS seems to need work doing to it gets very tiring, very quickly. Over the last three years we've re-plastered the living room and bedrooms, re-carpeted and re-painted, and replaced the living room furniture.

We still need to sort the kitchen out (it needs extending, ripping out and replacing) and the bathroom (which also needs ripping out and replacing). I'd much rather have gotten it all over and one with but we couldn't afford to do it that way.

I wouldn’t faff about doing bits at a time.
If you remortgage you could look
At the possibility of overpaying in a few years time.

@sunflowersandbuttercups I think part of it is that we’ve done that also. We’ve done each bedroom one by one, the hallway has been done, we’ve spent loads on the garden and I’m just tired. We’ve recently decorated the lounge as we had a new fire fitted so needed to paint and I just couldn’t be bothered because I’m worn out from doing stuff and I know there’s still loads more to do. I’d have more energy and enthusiasm if we did it all at once and I could see the light. But DH is risk averse and wants us to save and wait. He’s also not as house proud as me and isn’t bothered by the uneven drive, gaps in kitchen units from broken appliances we don’t use and the render being dodgy. Houses done up to how I want are selling for the 40k extra too so I think we’ll recoup it, not that I want to move.

However you do it, do all the interior in one go.

Mortgage it and then overpay the mortgage at the rate you could save up at.

The Mortgage rate should be very low, with current base rate and your equity, so likely no more than inflation.

Think of it this way, if it takes you 5 years to save £40k, that £40k job will be £44k by then with inflation.

You would pay the same or less getting it done now and overpaying the mortgage to cover it over 5 years.

Plus you'll have had 5 years enjoying the results of the work, too.

ask Boris

@EveryDayIsADuvetDay

on a more helpful note, @SofiaMichelle 's suggestion looks sensible - just double check there are no early repayment penalties.
Or look at a separate loan, secured on the house, which could be for a shorter period; I did that a few years ago for double glazing.
From memory, it was the same bank that the mortgage was from, and the interest same rate.

@Aqua55

3rd option, get a loan?

And pay way too much interest. The cheapest loan available is a mortgage.

Your DH has said No. That's the issue.

You have done everything bit by bit already.

You need to work out how you persuade him over to your way of thinking as you have done it his way for years.

Do your maths to show that its more expensive to do it bit by bit - seems he isnt interested in the disruption part.

Then suggest that you compromise by chunking the projects.

Put the most disruptive and costly on the mortgage. Get on with that.

Then the loo / utility (if it is separate) and drive and render - save up for and do last.....the addition to your mortgage of say 25k will be about 30 quid a month - so you will still be able to save 670 a month for the drive.

I would be impressed if you managed all of that work for that cost though.

I would remortgage as sometimes one job can sometimes beget another, 'frinstance we remortgaged borrowed more than we needed had our kitchen and bathroom done, the water was on and off on a regular basis, it was summer so the radiators weren't on, went to turn them on in September and last two rads on the feed refused to play ball, we had about £5,000 left and we were able to get the plumbers back to install all new rads without having to raid savings.

We were then in a position to pay a chunk straight off the loan.

Make sure the product you buy allows you to make as many overpayments as you wish.

We have more or less cleared the whole £30,000 but the product doesn't run out until 2024, so we have to keep some owing until then to avoid early repayment charges.

In the last year of our full mortgage we had the repayments down to £10 a month, which used to make us laugh every time we saw it.

Ask Boris?

Prices and demand for the building trade is very high at the moment, materials are a lot more expensive, and out new fence for an example prior to Lockdown cost is £750, my neighbour has just asked the same company to fix her fence which is identical to ours and she was quoted £1250. Covid and Brexit have pushed up demand, and you may find that 40k is not enough to complete the full project you stated.
From past experiences we have built a full height extension to our house by saving for the smaller items and taking on extra mortgage for the main build of the shell to a stage where it was watertight, but then took our time to do the first and second fix stages where the plastering, Electrics, Heating system are installed, followed by the Joinery of internal Doors, skirting boards, and Kitchens and bathrooms if any are fitted. The external tidy up of Drives and Gardens is the final stage as not to get them damaged by delivery lorries and skips being filled and collected. It took us nearly two years to complete our project, and we managed with the old kitchen units until 2 years ago when we used the cash we had left over to buy a new kitchen and cloakroom fittings to get the job fully completed.

How much is it to remortgage to release the money? I doubt it costs £500-700 a month. I would remortgage, then you can benefit from the improvements sooner. Mortgage rates have never been cheaper, it just makes sense.

@jgw1

Ask Boris?

Depends how urgent it is, I would get a loan and do the whole lot. You can then relax and enjoy. Life is too short.....

Remortgage - you'll be amazed at how little borrowing £40k would actually add to your monthly payments. The cost is spread over the length if the mortgage BUT you then overpay and pay off the additional borrowing much much quicker. You could even do in 5 years - the same as you would for a loan but at a much lower interest rate.

The interest rates on mortgages are so low at the moment you'd most likely get a cracking deal. Why do you think you see so many people doing work on their houses right now?

When I did my extension I waited until I needed to remortgage anyway (I was coming to the end of a 5-year fixed term mortgage) and did it all at the same time. I had savings too, which protected me against losing my job (which I did due to covid). But I'm on track to pay everything off as planned and I've had a lovely home to be in during lockdown.

From a practical point of view you risk trashing the bit you've already done by getting builders back to do more.

My advice would be to go and talk to your bank or building society and look at the different ways to raise the money to do the work you want to do.

And pay way too much interest. The cheapest loan available is a mortgage

Not always. It depends on the figures involved. When taking equity out, you're not just paying interest on the £40k but the whole mortgage over many years, but as a basic example £40k over 20 years at 3% would cost £13,047.06 or £40k over 7 years at 8% would cost £11,903.58

It'll probably be cheaper If you get it all done together. You could save the additional money anyway and use it to make lump sum repayments on the mortgage as and when you can so clear the additional debt quicker.

Interior in one hit with a loan. Save up and get the rendering & drive done after that.

Save half - then get a loan for the other half and do all the work together.

100% remortgage, you’ll be increasing the value of your property and getting the benefit from the improvements for longer. If you have spare money you can always overpay your mortgage.

Why don't you remortgage and pay off that £500 per month (including remortgage payments) so that it's paid off quicker?