Borrowing

  • Borrowing

     

  • The best advice is often to pay or fund a build with your savings rather than borrow if you can manage it as interest rates and borrowing costs are higher now. It is more difficult now to re-mortgage, arrange an release equity release or bridging finance now as bank lending and central bank restrictions have impacted on the market.

    A low interest personal loan is the first step in keeping costs down and banks have specialist home improvement loans that are cheaper than standard personal loans. Most banks charge different rates for loans and the maximum loan is usually €50,000. The interest rate you will pay is dependent on your personal circumstances, the amount you borrow and the term of the loan. In general rates vary between 8% and 12%. The term of the loan is usually 3 years and usually no security is required from the banks. It is sensible to shop around for the best deal and the Credit Union sector sometimes offer more competitive rates. Rates vary between 7%– 9% pa. For information purposes a 3 year personal loan of €10,000 at a rate of 8.2% APR would cost €313 per month or €11,265 in total.

    If you have positive equity built up in your home and your loan to value(LTV) and loan to income (LTI) are within industry standards a top up to your mortgage should be considered. Top ups over much longer terms (20 or 30 years) are possible. As a mortgage is the cheapest cost of finance it is worthwhile discussing an equity release with your mortgage provider before you commence your build or alternatively consider switching your mortgage to a new provider who will facilitate your needs.