Renovations or Mortgage

[MarigoldSpider]

I am thinking about finances.

I don’t know if it is best to plough money into the mortgage or spend money on renovations.

Our mortgage has 37years left. Which I know is a stupidly long length of time. We could only get a mortgage with a ridiculous term because of high childcare costs which are temporary. It stresses me out but DH is very sure that we will be able to change products to a much shorter term before too long. Interest rate is 4.5%.

House is dated. Nothing is falling apart but a new kitchen, a lot of wall paper stripping, plastering, knocking the odd wall through, redoing the bathroom and maybe converting the garage are all on the wish list.

A done up version of our house recently sold for £175k more than ours on the same street.

YABU - Mortgage
YANBU - Renovations

I cant advise what would be best for you but I can tell you what we did. We had a 5yr fix at v low rate. We did 2yrs of all disposable cash on renovations, redid all rooms bar kitchen and bathroom, external doors. The remaining 3yrs we aim to throw at the mortgage and bring it right down at the end of the fix. Once the mortgage is repaid, we aim to finish the house.

Personally I'd look at interest only remortgage if you have equity, lower the monthly payments and use that money to renovate.

Renovate. We took out a mortgage 9 years ago and remortgaged almost everything we've paid off in that time which was painful but like you say our house is worth £400k more than we bought it for. It depends on the house, mortgage, renovations and circumstances but either way you have to be able to look after the house and new kitchen and decor is part of that

Renovate. You will feel happier and more settled in a renovated home. After you have renovated, you can turn your attention to paying down the mortgage. The term of 37 years gives you the flexibility to plan. You can pay down lump sums after each fixed interest period before remortgaging again for another fixed period, or you can make overpayments during any fixed period. You can also choose to reduce the remaining term of the mortgage whenever you remortgage, if you become able to handle the larger monthly payments that go with the reduced term.
37 years is a long time but it has positives. For now, I'd treat the mortgage like stable rent and shake off the anxiety to repay it any faster than you need to.

Renovations are an investment and even a 4.5% mortgage is still a decently cheap loan so I'd do renovations

There’s a few years left on the 5 year fix. So I don’t think we can change.

Tbh as high as the mortgage payments are it’s still substantially less than 2 in nursery. Once they’re in school it’ll be less of an either or

We have a very similar house and are making a plan of all the tasks to do and what they cost and what order they need to happen in. We are then going to work out what we can afford to do when. For me nice rooms for the kids is the priority followed by kitchen so we will probably do that while still paying a bit extra into the mortgage. Garage conversion will wait a bit. We have an offset mortgage though so we can save into it and still get the money back out if we need for a renovation or anything unexpected

We were on 4.9% for 2yr fix, 37yr term, now just got a 4.5% 2yr fix for 35yrs. Also need significant renovations – we’re choosing renovations and we’ll bring the mortgage term down when the kids aren’t so little.

Knocking walls down is a big job plus if you are thinking of doing it to go open plan then really consider what your doing. As is garage conversion.

How much could you do yourself from the very minor up to more major stuff?

I am quite decent at DIY and do all painting and can do some minor stuff. DH is amazing, fitted our kitchen and our friend taught him to plaster. Our friend is a builder and said he would employ him if he ever needed a job.

Renovate. When we moved into our home we knew it needed some work. We did kitchens, bathrooms, attic, extension then all the cosmetic stuff like carpets, floors etc. Our thinking was it was our home and we wanted to have a space we liked to live in. Now we’re ploughing money off our mortgage. We took out a 30 year mortgage at the time but realistically we’ll have it paid off approx 6/7 years early.

Once you can meet the payments on the loan then just continue to pay as it and 1/5/10/15 years down the line you can look at increased payments/lump sums/loan restructuring.

If you can afford to do something quite big like a kitchen then you can afford to overpay a bit on the mortgage and do renovations over a slightly longer time frame.

You can do cheaper things like the wallpaper, etc, first, and then get to the larger things a bit later. I think the peace of mind that comes with knowing you're making good progress on paying off the mortgage is valuable.

You've got 2 in nursery. Renovations can be rather stressful and disruptive. Could you wait until they are older and less likely to be upset by the noise and mess?