How did you finance extension/ home improvements

[glassbrightly]

We are looking at an extension and some other home improvements (new kitchen etc). None of it is urgent but it would significantly improve the ease of living in our host.

We have been saving for a couple of years and have just over a third saved of estimated costs. The extension won't be straightforward and will require planning permission.

We are in an expensive period of life (kids young still need full time childcare for another few years), but estimates we could save the full amount in 3 to three half years.

My normal approach would have been to wait and save but our mortgage needs reviewing and we have been asked if we want additional borrowing. DH is keen on this as given what we are saving we could
Cover this (though our mortgage is still large) and we can over pay in the same timescales to pay it off.

Just curious as to what others have done ? Also bear in mind we've obviously spend lots of time at home so I may be a bit obsessed !

We checked that we would add value above costs and then took out a 2nd (small) mortgage. Rate is 1.2% and we will sell in the next 2 years so aim to recoup our costs pretty quickly.

For jobs smaller than a full extension (new kitchen/bathroom/flooring/plastering etc) we save.

Big extension- borrowed extra on mortgage. Paid off the extra borrowing in 5 years by overpaying on mortgage.

Kitchen - 0% credit card to pay for kitchen, saved up for fitting and paid outright.

I would save for a new kitchen but a big building job would be added to the mortgage.

We did the Victorian terrace side return and end to open it up onto a south facing garden. We did it just before our second child was born as we thought it would make the house much nicer for a year of maternity leave. We took a barely affordable second mortgage and knew that two at nursery would make things really hard. We had a bit of nursery costs on an interest free card towards the end but are now (mortgage aside) debt free and have enjoyed a lovely house opening onto the garden with small children, not only during maternity leave but also lockdown. Ultimately I saw it as a medium term cash flow problem not a long term one, if it had been unaffordable long term I wouldn’t have done it. We now have a small project we’ve saved for, but might need a bit on an interest free card for a couple of months. We do now have a share isa each that would probably cover it, but we’d rather not disturb them as they are there incase we want to do the loft or move house in a few years time.

@custardbear I think most estate agents will play the long game, it doesn’t take them long and it puts them in pole position when you sell, be that in 2,5,10 or 20 years.

We were in a fairly similar position (children pre-school/toddler age), had saved between one third to half cost of full renovation, extension and replacing all fittings but definitely needed something done; we were rapidly outgrowing space. Our projected costs were also similar to that you stated.

I am generally risk averse where borrowing is concerned and prefer to save but it made complete sense to extend our mortgage for this. With rates being so low, struggling without the space whilst still saving would have been silly, especially with 2 secure incomes. We borrowed upto 35% equity. Our work is coming to an end and our house value has increased significantly so we now have well over 45% equity when we remortgage in a couple of months.

We wanted to enjoy our house as our family grows rather than struggle for several years. With all the changes post COVID, it was without a doubt the right choice for us. We are due to move back in soon and have a fantastic house and decent size home office