AIBU to want to borrow £££ to

[cherry2727]

Extend our house ? We bought a small 2 bed 1930s semi less than 10 years ago and haven't done much to it since .
Dh and I now in a comfortable position financially after years of struggling . We have circa £2k of disposable income after bills . Not life changing but it's a lot to us as I've worked hard to get to a very good place in my career .

We have about £200k equity in the house and I suggested that we could borrow £100k with a repayment of £800 over 15 years to extend the property . It's quite small ( open plan) and doesn't work well for entertaining and downstairs space . He nearly hit the roof! We ended up arguing and him saying that I was trying to drag us into financial ruin! I work so hard and I just feel like we are stuck in this small house and I have little prospects of having a more comfortable home or even buying a bigger house.For background he is very laid back and I'm a lot more ambitious if that helps .

I honestly don't want to put us into financial ruin but I just assumed that this was the natural progression as we couldn't afford to move house . Isn't that what most people in our position do? I'm really curious whether I'm asking for too much? How do people afford extensions without saving for a decade ? Am I really in the wrong to suggest such? I am new to all of this and just assumed that everyone borrowed more to invest into their property. He isn't speaking to me and doesn't want to discuss it further . I feel soo deflated but also open to whether I am being unreasonable. Thank you

Would it take 100k to extend?

Yeah this is totally normal. We are about to borrow for a downstairs extension and plan to go up into the loft in 5-7 years.

£2k per week, month or year?

People do borrow all the time but not that many would remortgage 50% of their equity at current rates.

Is that £800 plus paying off another part of a mortgage or would that be your total mortgage payment?

@CallMeDaphne
Sorry that's 2k a month - disposable

@DashboardConfessional
Ah interesting- that would be £800 for the loan only . We currently pay £1000 towards our mortgage each month .

100k is a lot for a not massive extension, we did a 3m one at the back of our 30s semi for less than half of that.. have you got prices?

I agree with him - I think you're nuts.

1. Interest rates are very high - it's a terrible, terrible time to borrow.
2. Releasing £100,000 for a small 2-bedroom property is awful from a financial perspective. You'll almost certainly never make that back because of the street cap and plot size etc.
3. You'd only leave yourselves £300 per week after bills, that's very risky.
4. If you can't afford to move then why on earth do you think you can afford this?
5. Have you realised that this plan is costing you £3000 per year just in interest? Think how many venues you could rent for hosting people for £3000 per year.

Your idea is, frankly, so bad that if my DH insisted on it then I'd seriously consider divorce. Many people borrow to invest in their property, in fact, property is one of the safest and most certain ways to invest - but not like you've suggested.

£800 a month to repay for the next 15 years is a huge huge extra burden to take on, on top of your mortgage. If you have 2k at the moment a month surplus, putting almost half of that surplus into a debt repayment is not something I would personally see as a good financial choice.

That's assuming for the next 15 years your earnings won't drop, a huge recession won't hit, COL won't impact other payments etc. If you're now in a comfortable place after years of struggling I wouldn't be rushing to take on another 100k+ of debt.

Personally I think you could save for eight years and then be able to do it out of savings - if eight years of saving for it doesn't seem worth it - then 15 years of replacements isn't worth it - that's how I look at things when deciding what to risk!

You are not being unreasonable. We’ve extended recently and added £80k onto the mortgage to afford to do it. Plus we also saved for the new kitchen, bathroom etc.

I understand your DH’s reticence though; I did feel twitchy at the thought of adding so much to our mortgage when it was comparatively low.

Building work is not cheap now, ours began before the price of materials started to rise and it would be prohibitively more expensive now. So if you do borrow against your mortgage, I’d recommend you check and then double check that it’s worth it eg. You’d made the money back or you’d be staying in the house for long enough that it makes your time there significantly better.

It's a perfectly usual thing to do. My DD has remortgaged, as the value and her wages went up. She's taken down walls and extended the kitchen. She's put as much value on as she's spent. A lot of people buy with a view to improving by remortgaging later on. Do you have seperate savings? What's his plan with his?

It would be sensible to understand how much value you would realistically add to the house by doing so.

But really the main problem here is the communication between you.

Regardless of whether it is a good idea or not, the possibility of extending the house is something a couple should be able to have a respectful and civilised discussion about. Not have him "hit the roof" and then have a massive sulk.

I don’t understand why you can afford this but can’t afford to move?

Given those figures I wouldn't. It's not a financially smart move at all so I'm with your DH on this one. Could you consider a garden office or loft extension instead?

I mean if you are looking at paying a lender £1800 per month, then surely you could take your 200k deposit and buy something bigger? Unless you mean you paid £500k somewhere posh for this 2 bed!

I wouldn’t do it personally. Spending almost half of what you now have as your disposable income on the extension surely requires so much thought so I don’t think your DH is being unreasonable as he’s just cautious.
Also you need to see if what you do on the house will provide as much returns as well.

Building costs are so expensive at the moment. It’s double, even treble what it was even a few years ago. If you’re looking to release that amount of equity I would honestly look into moving first.

I'm glad I'm not the only one thinking this

Interesting perspectives- thank you

We bought the house for 250k and it's now worth circa 430k so we didn't buy anything fancy. We can't afford to move as an extra bedroom where we live is roughly 500k and upwards . We would have to stay here for a very long time so I just assumed that if we extend for less than we would need a bigger mortgage for we could be a bit more comfortable.

Building costs are dire - we are being quoted 3k per sqm for a permitted extension- it's unbelievable!

@Iknownononono I didn't consider the cost in interest per year - I just looked at affordability. I will have to now take this into consideration.

@MojoMoon yes I totally agree - our communication is really bad - mainly from his side . He shuts down whenever we don't agree - happens all the time. I'm not one who shouts or throws abusive or swear words around but he finds it quiet difficult to express himself when we don't agree . I
Don't know what to suggest to make him better - I guess some adults are raised with this skill and some aren't .

I did this and have never regretted it . Total mortgage payment of £1800 is not too bad . Disposable income would be £1200 which is quite good. It would have to be adding more value on property , give you more living space that would still be relevant in next 10 years or so. Do you have any other funds in case of ML or unemployment?

My EXDH was reluctant as he was content with the house, as I think a lot of men are . It works OK for them . However , the extension brought such pleasure for many years . I still love it and hope my son or daughter will buy it when I am ready to leave it.

Ah that's lovely to hear @Soonenough . I'm pleased it worked out well for you.

Sadly we don't have any grand savings just a few months worth. My dh is definitely one who is comfortable- he says he likes the idea of us paying £1k a month towards our mortgage and our overheads are low and wants to keep it that way. We do have a 13 years gap so perhaps he just wants to settle down and coast to retirement whereas I feel like life has just begun. I feel a bit deflated but I guess it's a dose of reality

With those figures, you could easily buy a 3 bedroom place for say £550k, with a mortgage of 65% LTV, given your significant equity.

Granted mortgage interest rates aren't great at the moment, but that would give you a larger, better laid out footprint downstairs, than extending the 2 bedroom house, which is more likely to be a long thin property.

Do you have children yet, because you could really regret losing the garden space when they come along.

@Starseeking - Hmmm do you think it's work spending to a broker on this? I've plugged the figures unto a mortgage calculator and repayments are roughly £1900 a month on a £550,000 mortgage over 20 years .

We currently owe 150k on our mortgage
House worth 430k with 15 years left on mortgage . It's a battle field for me - I just don't have a clue what is the best option and mr brain box isn't helping at all by sulking!

@HazardaGuest we have one ds who is 7. Our garden is currently 80 feet long and we looked into a 6 x3m rear extension so we would still have a decent size of garden left - well enough to stick a garden table and dreaded trampoline ! Lol

We extended when dh inherited some money so was able to pay outright but I don't think we would have borrowed extra to do it as we are just too cautious. It depends on your situation though and if you have 2k a month 'spare' then it sounds like you could afford it as long as your job is secure etc. Having extra space is life changing and does improve quality of life no end.