Borrowing Money - Loans vs?

[Sir BoD]

I've not long bought my first house, having rented for nigh on 25+ years. As a consequence of using up all my savings on the deposit, I am, for the first time in ages, without any spare money to do the place up.

People keep saying to me, you've got the whole of your life ahead of you (how ever long that is) to get the house as you want it, but I would like to get it to a standard I feel content with for now.

So, I'm thinking of borrowing some cash - maybe about £5,000. The problem is, I've never borrowed money before (until my mortgage), so not too sure what's the best (cheapest) option out there? Family and friends are not an option, so has anybody got any good (or bad) experiences?

I know this sounds obvious, but is it just a case of checking out banks / building societies for the lowest interest rates for borrowing, or is a credit card a better option?

Any advice is very welcome. Ta.

 

[Gramaisc]

Cards are not often the best way to borrow longish term.

Could you 'stick it on the mortgage'?

Do you actually need it all in one lump?

I am not a borrower - just a (now deceased) mortgage and a £110 overdraft* for a month in 1976, to cover a purchase committed to on the basis of a tax rebate that was being dragged out too slowly.

Some people seem not to like loans being paid back early - you could investigate the flexibility arrangements of whatever you end up looking at.

For some types of work, the provider may have their own payment arrangements that could be advantageous.


* via a Forumite's grandfather - I only wanted £100 - "Have another tenner, you never know what might happen"...

 

[darben]

Have a look a zopa -it’s peer to peer lending and borrowing. It’s a good way to save % wise so I imagine it’s quite fair to borrow too and you must be able to pay off early as it’s not a guaranteed % return on lending it always says borrowers can pay off early.

 

[darben]

Not common in this country but the credit union might be worth a look

 

[Carole]

I am, for the first time in ages, without any spare money .

It's really easy to borrow money, the hard part is paying it back.

I absolutely know that this isn't what you want to hear but if you have no spare money now then you'll have even less when you are paying back a loan with interest (or even a loan without interest.)

It's hard when you first get a mortgage but things do get easier.

My advice, like those of your friends would be to sit tight and wait and don't go down the borrowing more money route.

Even a year or so will make a difference, trust me.

 

[proactive]

It's really easy to borrow money, the hard part is paying it back.

I absolutely know that this isn't what you want to hear but if you have no spare money now then you'll have even less when you are paying back a loan with interest (or even a loan without interest.)

It's hard when you first get a mortgage but things do get easier.

My advice, like those of your friends would be to sit tight and wait and don't go down the borrowing more money route.

Even a year or so will make a difference, trust me.

Absolutely spot on.

 

[Gramaisc]

It's really easy to borrow money, the hard part is paying it back.

I absolutely know that this isn't what you want to hear but if you have no spare money now then you'll have even less when you are paying back a loan with interest (or even a loan without interest.)

It's hard when you first get a mortgage but things do get easier.

My advice, like those of your friends would be to sit tight and wait and don't go down the borrowing more money route.

Even a year or so will make a difference, trust me.

Absolutely spot on.

As much as my history above shows that I obviously work along those lines, there are times when it may make sense to borrow. The clear case is the house purchase itself - few people would ever be able to save fast enough to buy a house in the UK before they die.

If we're able to save, say, £100 a month - then that's about four+ years to accumulate five grand, if prices don't rise significantly in the meantime - if you pay £100 a month on a loan of five grand, but for five years, that gets you the improvements four/five years earlier for a little extra payment. Let's assume that @Sir BoD has fifty years left in him, that's about eight/ten percent of his available time...

The figures above do not constitute an offer!

 

[tek-monkey]

How much can you comfortably repay a month whilst still having backup for emergencies? Now you have a mortgage you need to pay for everything house related, trust me it's a bugger! Work out what is truly spare, then knock off a bit. Only borrow what will cost less than this to repay.

When I moved into my place I really wanted to stamp my mark on it, a few years in and I couldn't give a monkeys as it's just a roof.

 

[Sir BoD]

Thank you all for the very sage advice folks, particularly the concern from Carole. When I say I haven't any spare money, I meant enough to actually be able to do something constructive with the house. I can, and have started to save again, but it would take me quite a length of time to be able to afford to get the very basics done. Me sprucing up the house isn't about the right paint or wallpaper, it's about getting a number of rooms plastered (this is not so much cosmetic - the walls are that bad), doors replaced, floorboards replaced and plumbing seen to, amongst other less 'important' things. It's not about having a show home, it's more about being comfortable and feeling like it's my home.

Anyway, there's a bit in this thread to think about, so cheers again.

 

[tek-monkey]

Just separate need from want, plumbing is essential but plaster not so much. It helps prioritise when focus wanders.

 

[Cue]

If you can pay it off in 30 months or less, a CC is great if you have the credit rating. I have a 28 months interest free card that was incredibly helpful this year.

But, failing that - Tesco, M&S, Sainsbury’s, etc all do good interest rates. I’ve got a loan going from renovations and a little bit of deposit as we couldn’t get a 95% LTV (all above board, my mortgage lender allows it). They usually do stuff like starting a higher rate at 9 years so you borrow for 8 years 11 months