# Building extension - finance advice needed



## theoneill (8 May 2013)

Hi all,

Sorry if this is a stupid question.

We are considering getting an extension to our home and some extensive work done to the garden - new patio & outdoor room.

We think we should allocate 30K in a worst case scenario (we have yet to get quotes) We are in the fortunate position of having equity in our home and we have savings. 

While we could pay for the full amount from our combined savings this would leave us vulnerable to any negative changes in our employment position. I have lost my job before so I would like to retain a safety net.

Our current mortgage is about 110K with NIB and we are on a tracker of .5 above ECB. I am thinking of increasing our mortgage to pay for the work, but I would assume this would affect our tracker.

What is best practice in raising money for an extension and is there anything we should absolutely not do?

P.S. We are not looking to increase the value of our home, just the quality of life within it.

Thanks in advance


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## brian (5 Jun 2013)

Hi,

If you release equity without losing your tracker mortgage, then that would be best option. 
If not, then maybe a personal loan from bank for 20k, add in 10k from your savings, leaving some savings left over for rainy day.
I recently got a personal loan from ptsb for 25k for extension.

thanks,

Brian


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## Gerry Canning (5 Jun 2013)

brian said:


> Hi,
> 
> If you release equity without losing your tracker mortgage, then that would be best option.
> If not, then maybe a personal loan from bank for 20k, add in 10k from your savings, leaving some savings left over for rainy day.
> ...


.........................................................................................
30,000 over 60 months = monthly 640 @10%
30,000 over 48 months = monthly 760 @ 10%  
20,000 over 60 months = monthly 430 @10%
20,000 over 48 months = monthly 500  @ 10%
.................................................
Above is fairly close to current loan costs.
As Brian says go for a mix ie put in K10 and borrow residue.
Also go for as SHORT aterm as you can afford.
Its alright having a rainy day fund but not much good if your debt is more than it !!!

Good luck.


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## brian (5 Jun 2013)

*smallest loan amount possible*

yeah salmon, totally agree. personal loan rates are pricey at the moment.

so maybe OP should look at it this way.
what is minimum amount they are happy with in their rainy day fund?

loan amount = savings -  minimum amount in rainy day fund.


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## theoneill (11 Jun 2013)

I think I will be able to fund this from savings. However, I will have to treat this as a loan to myself. With this in mind I will set up a standing order to pay myself back with interest over 10 -15 years. Or am I robbing Peter to pay Paul?


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