How did you fund your extension?

[McMonkeyMcBean]

I know the most common, and indeed probably only sensible way is through savings. But it's going to take us about 25 years to save up enough for one and in the meantime our dank, dark tiny kitchen is falling to bits, the lean to is collapsing and the children are warring over territory in their tiny bedroom.

Has anyone managed to do some nifty borrowing / loan / remortgage type scenario without coming horribly unstuck?

As a bit of background, in the vain hope that someone might come up with an amazing, low risk super way to generate £60k out of empty space:

We only have about £50k equity in the house, which is worth about £220k.

A house opposite, exactly like ours but extended as we'd like, to sold a few months ago for £280k.

The market in our area is buoyant, and wasn't really affected last time prices dipped. It's a place where demand will always outstrip supply.
There have been five houses in our immediate vicinity gone on sale in the last year or so. Each has sold within days.

Hi McMonkey. I know this won't be very helpful but this is our experience.
We live in a poky 49m2 top floor flat with our 2 boys (7 and 11). It's in London and much as I'd have liked to move out to another city eg Bristol, relative proximity to a poorly Dad has meant I've felt I couldn't move away. Husband was determined to do an extension and went out and made 2 loan applications. Both were torturous to complete as there was a key homebuy loan and the govt owns 20%. Anyway after giving all info and (we thought) reassurance necessary, both banks (Nationwide and Santander) eventually turned us down citing bizarre reasons (it wasn't addable onto our mortgage, as we'd been lucky enough to pay it back entirely). But that didn't really make sense to me, as we certainly could have afforded the repayments.
I had just enough in savings to pay for it outright, but the psychologically beneficial safety net I'd been building up since Saturday jobs age 16 has been wiped out. This has put a stress on DH and my relationship, i have felt pretty resentful. He has no savings at all, so is paying me back 70% of the loan over 5 years. Sounds harsh, but I just wasn't happy to totally foot the bill.
Well done if you've read so far! I hope your loan applications are a lot more successful.

Hi-- we used a combination of savings, borrowing etc to fund our massive renovation / extension on our new home.

My husband and I were each able to borrow 15k at fairly reasonable rates from Tesco Bank and HSBC (30K in total). After the work was done, we remortgaged the personal loans into our mortgage to take advantage of the better mortgage interest rate. I should add though that all of our borrowing has always been very affordable relative to our income so we weren't taking on huge risks.

The rates for personal loans have gone down recently with HSBC offering between 3.9% and 6.7% depending on how much you want to borrow and the terms are up to 10 years. The most they lend is 25k so if you each took the max out (and could afford it) you could borrow up to 50k for your work. 10K on zero interest credit card or buying things (like a new kitchen from Ikea) on a zero interest payment plan are also ways to close the gap on your 60k budget.

If your house will be worth 280k at the end, you can remortgage up to 224k post work. It sounds like your existing mortgage is 170k based on what you've said so you could realistically remortgage the personal loans into your mortgage once you were done.

Big caveats though: could you afford to borrow 50K in personal loan debt? Could you afford a mortgage of 224k both at current rates for a 80% LTV and if rates went up? If you answer yes to both, then go for it but if not, then just be patient and try to save up until the borrowing you need is something you can manage comfortably

Lucky you're post didn't appear on the realtionship board Bob The nutters over there would have torn you a new one especially if you'd been a man and was making your wife repay 70%

We funded ours through savings. When the savings ran out (or when we'd spent as much of them as we were prepared to) we began paying for things monthly. We're not just at the point where we're going to order part of the kitchen. We'll save then next stack of cash, and do a little more after that. It's been a ball-ache but we know that when we get to the end, we will have added substantially to the value of the house, without adding a penny to the mortgage.

We extended the mortgage to cover ours, rates are so low that it was the most sensible option. However, we would like to do a loft conversion now and won't do it till we have the cash as don't want to extend ourselves further.

Totally agree Malice. Money really is the last taboo. But I wanted to be honest, not. PC.

We also extended our mortgage. I'm not sure hos much value we have added with our kitchen diner extension, but our house is worth about £585k and our mortgage had gone up from £45k to £145k. I'm nog entirely sure hos we are going to pay this back, but feel that we could always downsize at retirement if necessary as our equity is about £440k. At least we can enjoy the space now when the children are approaching their teenage years.

Extended mortgage as our fixed rate deal was coming to an end, also, we had some inheritance, and got a payout from BUPA when DH got pneumonia and was hospitalised for a month mid-build.
I wouldn't recommend the third form of finance, but it certainly helped get the giant mortgage back down to a reasonable level.

Thanks guys. It's really interesting. I think in reality we just need to wait and save. We've no savings to speak of do no cushion. We're both employed in the public sector so have had five years of pay freezes which has hurt

I'm coming to the end of a postgraduate degree so things might look brighter in a year or two

Can you move?

We saved it up.

Every time I went shopping I would consider every single purchase. Not just big stuff but teeny stuff like £1, and genuinely managed to cut our spending by a huge amount. I shopped in Primark for t shirts for me and owned 2 pair of jeans, some leggings etc because as lovely as it would have been to buy new clothes, I didn't actually need them.

Basically I realised the difference between wanting and needing and knew that every £1 I spent meant the extension was a little bit further away. We knew it would take a few years and I am still living with some awful decor (and gold taps in the bathrooms) but the kitchen was the priority.

The upshot is we had our kitchen extension built last year and I genuinely skip in it almost daily. It has transformed our lives in terms of space and emotional/mental happiness and the sacrifices were worth it.

If you can get the building shell up and first fix, you can then put new stuff in as and when. ie I had an shower cable put in last year but no electric shower yet (that is next year, farewell gold taps)

contented that is EXACTLY what I need to do. I am a complete spendaholic. I buy stuff daily

We can't move, we need to be here for work and be close grandparents for help chilcare. It's an expensive area and we were fortunate to be able to buy what we've got

I'm going to stop buying shit and focus on saving. Get myself in that mindset

We were v austere in the 2 years before moving house and used the money to make big overpayments on our mortgage. When we moved house we kept back about 35k in equity, to which we've been able to save about another 5k since moving. Kind parents have chipped in about 3k. That would have covered the extension were it not for a plumbing misadventure and a spiralling built costs, so I'll be completing the forms to add 10k to our mortgage to finish the job. This will take our mortgage up to 198k, while the house is increasing in value from 250k to 300k.

Meanwhile DH inherited 12k recently and that will buy the new kitchen. Yes that could have been used to finish the build and yes we could have made do with a far cheaper kitchen but this build has been a slog and we want to finish on a high note with the kitchen of our dreams. (My dreams. DH would prefer a new mountain bike. He's indulging me)