Take out a loan or use savings to buy a new kitchen

[Jellybabie3]

Hi all. We desperately need a new kitchen. Costs will come to around 7k. I have 4.5k in savings but could maybe make up the rest before the work gets done. This is all my savings.

A loan will cost £150/mth which is dooable but weve literally last month paid off all our outstanding debts so makes me abit .

It will cost £217 over three years in interest.

What would you do?

Use my savings it will generally save you interest, set up a standing order to pay £150 a month back to your savings acccount.

How much are you proposing to borrow? £150 a month won't clear £7K capital in three years even at 0% interest.

Can you compromise by keeping say £1.5- 2K in savings for emergencies? Borrowing nearly always works out more expensive than losing the paltry interest on savings.

Sorry its £150 for me and DH so £300/mth

7.5k at 2.9%

Hmm i think I have worked this out wrong

Looking at the calculator online it suggest £217/mth costing £335 over 3 years

Yes I'd do it. We're in a similar position. It just needs doing tbh, we've lived with it for too long. Recently cleared all other debts and we can afford it (just).

By do it do you mean take out a loan?

Just use your savings. Far better than getting into debt.

Use savings. You can build them up again. The feeling of being debt free must be amazing.

Its just the thought of having no emergency money that frightens me

The other option is taking out part on a 0% deal like Ikea

And using savings for the actual buiding work

We were in a similar situation, our kitchen refurb COD £18K we took out a £10K loan over 2.5 years and used savings for the rest. It’s always nice to keep some savings just in case so maybe use half?

Have you bought the actual kitchen yet? We've just bought an ex display kitchen with all the appliances included and got an amazing deal! It was advertised at £12k and we got it for £1600
It's going to be about £3000 to get it fitted and have the plastering, tiling, electrics and flooring done.
The kitchen itself is in perfect condition except for a chip on the worktop but we're just going to buy a new worktop for it.
We got ours from a local independent place but the bigger chains like magnet, Howdens, b&q, wicks etc sell off their displays too.
I think re the loan it depends how desperately you need it done. I'd take the loan if I couldn't live with it for any longer otherwise I'd save.

Thanks. We have picked the kitchen and had a quote for the builder. Its doable with savings. just. but its the thought of having no emergency money that worries me. But i want saving to start ttc for dc2 this time next year so could do without monthly loan payments

Not having any emergency fund will make you build it back up faster by taking on as much work as you can, being as frugal as you can, forgoing any holidays, no eating out, doing Christmas on a very tight budget etc.

You are debt free, you really don't want to go back into debt. So I would be trying to do it as cheap as possible with the savings you have and throw as much as you can towards it over the next couple of months if the work itself won't be done until next year.
Maybe even the kitchen will be cheaper - could you get it in a January sale?

That's good advice thank you. I think we go for it and save up ASAP.

We just got a 26 month interest free credit card from HSBC for up to £8k. That might be an option.

We need a new kitchen too but I'm hoping to save the main chunk and just have a couple of thousand on interest free credit card if I need to to get the kitchen I really want - it's our forever home.

I don't understand your sums for the loan. If you are paying £300 per month for 3 years you will pay back nearly £11k, so you'll be paying back a lot more than what you've previously suggested.

I know what you mean about savings, but it depends how urgently you need the work done. If you can bear waiting then do that - but otherwise I'd use a mix of savings and a loan.

I'd go for interest free credit from ikea, that's what we did. Could have paid cash but why would you if they will lend you the money for free?

Hi @Jellybabie3

We did part savings, part 0% credit card for our kitchen and made sure the amount on the credit card we could pay off within the interest free period!

I'm with cc4490.

Moves into a house with no kitchen. In the post-Christmas sales period, went to visit all the local kitchen showrooms, bought lots of units very very cheaply including ex display.

Bought all the doors from another place now sadly gone but it used to essentially buy up old stock from places that were closing. They were a very nice oak veneer, in a shaker style.
Bought the worktops from an actual kitchen place.
Got given a free oven because the fan wasn't working: ordered the part for about £50, nowadays even cheaper on espares.
Fitted it ourselves. Total cost incl tiles, paint etc was probably 5% of having it done.

We're having some alterations here and I will just replace all the doors and worktop with something more modern (currently 30 year old dark oak country cottage style), there is absolutely nothing wrong with the carcasses.

I think you should check your sums as they are not adding up. Also seems very unlikely that you could borrow £7500 over three years and only pay £335 in interest.

I would be tempted with loan as I would nt like to have no savings. Although yes it would definitely be more expensive.

Unless your kitchen is hazardous to health then don't have a new one.