Savings for extension

[JG24]

We've decided we are going to start planning for an extension when our mortgage renews in just under 5 years
Situation at the moment

• savings of £3k (general emergency fund/buffer)
• bought house in Nov 2019 for £250k with a £230k mortgage
• renewed mortgage in Nov 22 for 5 years, house was then worth at least £280k and took £20k out of mortgage to do garden and buy a car
• at a complete guess our double storey extension will cost £100k+
• i have some debts which I should be able to mainly pay off in next 12 months then could save £700 a month and more when nursery free hours kick in

Where do we start?? Do we save into a stocks and shares ISA as we don't need the money for 5 years? Do we plan to save some, take more out of the mortgage and also get a home loan.... I've no idea if it's feasible or not!

So you need to know approximately how much you can save in total by the time you need it to pay for the extension and then see if you can borrow the rest, but it’s a lot of savings!

48 months x £700 = £33,600 + 5% interest - £37k (see link to MSE calculator!)

Then do the same with the number of months x amount saved per month on nursery fees eg

36 months x £800 =£28,00 + 5% interest - £31k

Added together is £68k then you could add the rest to the mortgage. But that’s saving £1500 a month and probably too high?! It depends how much more your mortgage lender would let you borrow and if the repayments would be affordable for you.

I don’t know a lot about stocks and shares ISA but I would of thought too risky for less than 5 years as you could lose money. I would use a high savings rate ISA / savings account (although be aware you have to pay tax on interest above a certain amount).

https://www.moneysavingexpert.com/savings/savings-calculator/