How do you finance home renovations?

[HelloCat]

We bought what I really hope is our forever home last year. We did stretch ourselves to the limit on the mortgage but knowing that both our incomes were likely to increase, the house is in a 'good' area (so renovations hopefully should pay off) and that actually we got a good deal on the property (we were sitting tenants).

The house needs a lot of work doing, both structural and cosmetic. Including some roof repairs, complete rewiring including adding plug sockets etc (currently one per room, wtf?), some re-rendering, new boiler, ideally new windows/ improved insulation (it is in a conservation area so this pushes the price right up). Medium term, kitchen needs gutting and redoing, and bathrooms too really. Whole house needs painting and so on, as would be expected. Other bits and pieces too.

We did make a budget when we decided to buy but that's been a bit blown out of the water by a couple of unexpected emergency repairs. We had planned to use our salaries to finance the repairs. We do have other options - we could extend the mortgage a little (we have equity) or we could get a 0% finance option, save and then pay it back at the end. Part of the problem, to be honest, is that we are both really credit adverse and will go without rather than taking out debt (our car is about 1000 years old, for instance).

I'm just interested in how others have gone about financing fairly major renovation projects?

We lived with parents and saved before. And did use some credit - we saw it as an investment in the property so were comfortable with doing this. We were only able to do a limited amount though, we have other renovation plans for the future but will save to pay for them

We have always borrowed but that was when interest rates were low. We are quite happy to leverage money and borrow.

We remortgaged a BTL to raise £50k for this house but now maxed out and need another £50k. So can’t do any more work for now.

O% credit card might work well ...particularly if you are good at,managing money which sound slide you are. But its a lot of work! Amd somenofntaht might not be payable with a credit card. Most people extend mortgage but that's expensive right now with interest rates. I'd be saving like crazy and working out what order things need doing in and which can be done on zero percent.....

We're remortgaging to finish refurbing. We have had to abandon plans for an extension though 😕 If we had known then what we know now, we would have done it all at the time when we converted our loft.

Great thread question! Just about to move into our fixer upper and wondering how we'll pay for everything!

We didn’t go to the limit with the mortgage when we bought, so still had wiggle room

We didn’t over stretch our initial borrowing, and added to our mortgage when we did our loft conversion. I hated seeing the debt increase again but justified it on the basis that a structural change of adding a bedroom and a bathroom would add value to the house.

I don’t want to borrow again though, especially given the rise in interest rates. There are lots of things we still need to do but it will be a case of saving up and doing it bit by bit.

Wow that sounds like a lot to take on, OP! Have you started getting quotes to see what the ballpark figures are?

We bought a fixer upper as FTB. We did the bare min on moving in to make it safe and secure, funding it from leftover savings from the purchase. Slapped a load of white paint everywhere and then lived in it for 3 years whilst we saved hard. At that point, we had about half of what we needed (a wedding and DD1 had also arrived in the interim), so at the point we next remortaged (although it was when rates were MUCH lower), we borrowed the remainder to do eg. the loft conversion and update the top two floors, bathrooms etc. Now that is completed, we are back saving again, with the plan to manage with our awful kitchen until the next time the mortgage needs fixing again. Then we can decide if we have enough savings to do it outright or again, take a little extra against the equity depending on rates, or other options such as financing the kitchen through a retailer etc.

We did a combination of saving and a little borrowing. I wouldn't do the borrowing in the current high interest rate environment as it is now though. I would be focusing on maintaining zero debt and building savings.

I had ample savings and ploughed all of them into it ,and shortfall was made by 50k of 0% credit cards. Paying those off atm.
I wouldn't touch my mortgage as its v small at 12% ltv and so had to raise it by other means

We could do a lot ourselves but won’t touch anything that has a structural issue as required professionals only. We also didn’t stretch ourselves t9 upper limit of mortgage, that’s your issue right there.

We are in a similar boat but didn't max out our mortgage borrowing in terms of monthly expenditure and held some money back from our deposit instead of putting it all in. Before we committed to the purchase we did a rough calculation of what it would cost to make it a water tight shell with one working kitchen, bathroom and bedrooms. That's our first step. We are still saving as we go along so it may be that by the time that work is done, we will have the funds to complete the rest of the work at the end of this so that it is essentially all done at once.

As life can turn upside down in a second we would never stick things on a 0% credit card in case anything happened and we couldn't then pay the card. We are savers then spenders. We moved here, nowhere near the top end of our budget and saved hard for a few years for a kitchen extension. No holidays abroad, just some weekends away and days out with the children, no buying clothes/shoes for us unless we absolutely needed to, and to be honest we didn't. It wasn't a miserable existence but we had a goal and we were determined.

We are also bargain hunters and very good at DIY having done work in previous houses so we were able to take on a lot of work ourselves. I would get the messy stuff out of the way first so if that is rewiring then do that but watch some youtube videos so you know what that entails because it is floors up, chasing out cable runs in walls etc. Consider outdoor sockets with the ability to turn off the socket from inside the house, also where your Christmas tree is likely to go and put a socket there.

We had a spreadsheet for the house with essentials (new boiler) and would be nice cosmetic things ie the boy's bathroom was pink with gold taps for about 5 years, it functioned so we left it. New windows improved heat retention so that was more important than a white bath.

We listed each room and what needed doing plus a separate overall list that affected the whole house. If you have never done this before it will cost more than you budget and take longer than you think plus it takes up a lot of head space. I am the short list maker, Dh chooses from the shortlist. We play to our strengths, he is bad at deciding from 100 tile choices, so if I shortlist to 5 he can more happily cope with that.

Gone slowly (10 years but it was a real wreck) and save up for the work as we go. We, too, are very averse to credit.

A mixture.
Kept some savings back when bought house, added €50k to mortgage ( so savings and mortgage gave initial €100k for major work- it’s an old house and we bought for about 1/2 value it is now)

Then over 5 years saving and doing piecemeal. We still have stuff to do ie windows at back are still all old single glaze, but that will have to wait. Bar structures and things like plumbing and full rewire, we have done 90% of the work ourselves also. So takes time and learning, but saved a fortune in labour costs.

We saved up for each job/room that needed doing. It has taken us 8 years but was great fun and also challenging. We were happy to rough it for a bit rather than take on debt.

I've always used the proceeds of the sale of my previous home to finance any work. I'm also experienced enough to know about how much things will cost - if not I'd take any quote, double it and at least double the time!
For my last move I downsized by half and yet house was twice the price (moved back to London) so sold two others properties to finance the purchase and renovation.

Worked overtime to boost savings.
Had 66% equity in our house (i.e LTV 33%) so borrowed against that so now “only” have 50% equity.
We worked overtime, which increased our cash flow a lot.

Also lived in the property throughout rather than renting, which saved us > £30k

We borrowed 25k extra when we remortgaged to do some work. We also got a kitchen on 0% from ikea.
I buy/sell furniture as an extra to raisea bit more money. We do work slowly, always hunt for bargains and try to do stuff ourselves. It's expensive, slow and hard work, but worth it.

Mainly savings from not paying for childcare during COVID, but also some from salary as we went along while putting everything on a credit card. Then I transferred that balance to a 0% credit card.

Is this ^^ post AI?? So weird to appear on a thread from last year... 🤔

Hmm if you’ve stretched yourselves to the limit mortgage wise you’re not credit adverse. That’s fine but you need to change your thinking.

We always use 0% credit cards with money transfer offers to do home improvements. Or 0% purchase offers if it’s something we can pay for using the card: then we pay it off and / or switch to another deal when the 0% offer ends.

Oops bit of an old thread. Sorry!

Old thread!