Q – We are fortunate enough to own our own house but need to borrow € 48,000 for a kitchen extension and complete refit.. white goods etc. What is the best way to finance this and whom should we go to ? Love the column – Sheila, Dundalk Co Louth
A – Thanks Sheila. All lending is based on your ability to repay. I presume you already have a banking, post office or credit union account. That institution would be the first place to apply as they know you. For a loan of this type, a bank mortgage, post office or credit union loan would be the best. Credit unions and post offices would be considered more flexible than banks, second their interest rates would generally be more competitive than banks’ personal loans rates and thirdly it’s a less arduous process going through the post office or credit union. You will still need to prove you have the ability to repay and all lenders irrespective of whether you have a savings account with them already will check your credit history with the CentralCreditRegister.ie (check it yourself – it’s free and takes 3 to 4 days…all you need is name address and date of birth). Most credit unions would require one month’s membership plus on your first loan with them, a deposit of at least 2.5% of the amount you are looking for – so in your case, € 1,200. Post office loans can be applied for online. Any missed payments over the last 5 years will result in a decline of your application unless you have a terrific reason for that missed payment. Repayments can be spread up to a 7 and in some cases a 10 year period. At 7% interest rate for example over 10 years, the repayments on €48,000 would be € 557.32 per month. Taking out a long term bank mortgage for such a comparative small amount may not be practical. Good luck with the extension.