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Property/DIY

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Original poster

Funding extension

24 replies

Vetyveriohohoh · 17/02/2021 20:19

How do people normally do it?

First big piece of work we’re doing, expect it to be £110k ish

DH obsessed with not taking any debt on snd we should save to have it all cash.

Do people normally add to mortgage/take loans or wait? We have a lot of it in saving and I just want to get on with it now, also I’m scared of spending all our savings.

Any thoughts?

OP posts:

HasaDigaEebowai · 17/02/2021 20:24

Savings

Shopgirl1 · 17/02/2021 20:26

We are saving to extend at the moment. I expect we will also borrow some.

anotherlongwalk · 17/02/2021 20:29

I'm releasing equity in my house by adding it to my mortgage

Chumleymouse · 17/02/2021 20:31

Saving or do it as we go along ( takes longer that way ).

Original poster

Vetyveriohohoh · 17/02/2021 20:32

We could add to the mortgage, we’re at about 55% LTV - is it a reasonably straightforward process if we decided to?

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LemonSwan · 17/02/2021 20:33

Likely straight forward.

I would base it on whether you are planning to sell or not. If its your forever home it may be worth saving first. If you are selling at some point then just equity release as it doesnt matter then.

Original poster

Vetyveriohohoh · 17/02/2021 20:34

We’ve done everything else as we went along @Chumleymouse but this one is an external wall so all or nothing really, will be too disruptive to break into chunks. We could cut back spec but when sending so much I feel a bit like I may as well spend the extra £5k or whatever to have it perfect... terrifying though

OP posts:

Original poster

Vetyveriohohoh · 17/02/2021 20:35

No plans to sell in next 15 years probably unless something unforeseen happens

Sounds like DH approach is most popular

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LemonSwan · 17/02/2021 20:36

And 15 is the remaining full term of your mortgage? In that case I would save as much as I could.

Original poster

Vetyveriohohoh · 17/02/2021 20:38

20 on mortgage technically (we normally overpay but stopped to save for this)

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Gwenhines · 17/02/2021 20:38

We asked ourselves would we be happier:

A) saving for years before starting and putting up with what we have now, knowing it would cost less due to no interest needing to be paid on a loan? Or
B) taking out a loan plus using current savings, doing it now and enjoying the space throughout the years we would otherwise be saving and putting up with what we have now?

B won with no regrets, even though it cost us in interest on the loan. The interest we view kind of like a rent payment to have those extra years of use out of the improvements made, I guess renting a more comfortable living environment for a few years ahead of when we would be able to afford it through savings alone.

Original poster

Vetyveriohohoh · 17/02/2021 20:44

@Gwenhines that’s totally my view too. Using all our savings scares me too but I guess that’s silly if it’s offset by debt

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Volcanoexplorer · 17/02/2021 20:45

I suppose it depends on how quickly you could save that amount of money. We would have to put it on the mortgage.

Chumleymouse · 17/02/2021 20:46

I’m like your dh , I’d rather not borrow and do it as we go along, but sometimes big jobs do need to be done at once. If you have savings I would use it first. I don’t see the point of money sitting in the bank if you can put it to better use.

We are always in the middle of ongoing renovations , we could borrow money to pay people and get it done quickly but I’d rather plod along and do it ourselves. We will run out of money eventually, I’m estimating about 40% ish but by that time we should have earned a bit more. Good luck 👍

AdventureIsWaiting · 17/02/2021 20:48

Mortgage + savings, but a) we were fortunate enough to start the process mortgage-free, which b) enabled us to get a five year deal with a tiny amount of interest.

Our thought process was similar to Gwenhines - by the time we had sorted planning permission and waited for an excellent builder, we were nearly a year beyond the original decision to go for it. We're now several years into enjoying the space, and just about paid the mortgage off (so reaching the point where we'd have saved the money if we took your DH's way), but we've had the benefit early.

Another serious consideration is how long it will take you to save up £100,000 vs. how much will the cost of the building work increase over time; it would cost us more to do it now than we've spent paying off the mortgage, so a mortgage was the most cost-effective option in the long term.

Also you mention paying the extra to do it properly - DH and I had a proper weeks-long row over the type of window to put in upstairs. I wanted the cheaper option. I have grudgingly conceded that he was right, and that if you're sure you can afford it in the long term it's better to do stuff like that properly first time around.

BrilliantBetty · 17/02/2021 20:50

Planning an extension and we are hoping to increase our mortgage to cover it. We only have about 20% in cash savings.

There would be no point waiting. We need it now while the DC are young and the space will be well used. It's needed now and for the next 12 years. After that it will be the 2 of us and I'm sure we'll have the savings by then, but the moment will have passed.

Original poster

Vetyveriohohoh · 17/02/2021 20:51

Thank you, given me lots to think about.

We’ve already got planning permission and had some builder quote and think we’ve chosen one.

Will discuss more with DH I think.

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Oly4 · 17/02/2021 20:53

£110K cost which we financed 50/50 mortgage and savings.
We have about 50% equity left.
No regrets even though we now have to get our savings back which we are working on.
We didn’t want to spend our children’s childhood in a home we didn’t like. And we needed the space for them

Original poster

Vetyveriohohoh · 17/02/2021 20:55

@Oly4 if you don’t mind me asking, did you spend all your savings or keep some as a safety net?

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Palavah · 17/02/2021 20:58

Interest rates are the lowest they've ever been.

Inflation means your savings will lose value if they sit in cash.

What would the extension be worth to you if it were done by next year, versus however long it would take if you saved.

Oly4 · 17/02/2021 21:10

We spent it all.. now working our way back up the £30K nest egg we like to have in case of redundancy etc

Original poster

Vetyveriohohoh · 17/02/2021 21:17

Thank you, that’s reassuring

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GrumpyHoonMain · 17/02/2021 21:42

If you have invested your savings then keep them right there. I have doubled my money since before brexit and gains will only increase from now on as we establish trade agreements etc. Interest rates are far lower than investment gains right now even my pre-lockdown investments have gained 40% on average across the portfolio.

If your savings are in cash then you might want to use some and borrow some. I would never recommend spending all your savings while still in Locckdown simply because until it lifts employers are favouring short term gains via redundancies and you may need money to live on.

Londongent · 17/02/2021 22:58

Increase in mortgage, rates are as low as they can be it is the cheapest way to borrow money and mortgage lenders are willing to lend to fund home improvements.
You can enjoy your extension now or wait years saving for it. Or a combination of both, but leave yourself a safety net

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