advice on best loan please

melly_g · 5 December 2004 at 8:35PM

Hi,
I would like some advice on which would be the best loan for myself and my husband who want to borrow some money for home inprovements.
We would like to borrow about £7000 over a period of between 3-5 years and would like to be pay it off early if we can
without a penalty fee.
We don't mind whether it is secured or not and can manage up to about £250 a month payment.
We also want as little amount of interest as possible,
Any advice would be most appreciated
thank you

BenL · 13 December 2004 at 12:38AM

Take a look around on https://www.moneysupermarket.com and sites like that.

I'm not sure if they have a box for filtering out redemption charges though.

You should be ok with £250 to pay back a loan that size.

Just watch out for the typical rate trap as they will decide your rate according to your circumstances against their rating system.

Although Northern Rock look to be the cheapest they can be quite hard to get a loan from.

Do you get any sort of staff benefits from your workplace linked to a bank/lender?? Might be a good place to start.

I work for a bank so its the place I go for cheap finance but we do have links with employers as well to provide their staff with cheaper money.

Ben

Martinslovechild · 13 December 2004 at 2:12AM

We would like to borrow about £7000 over a period of between 3-5 years and would like to be pay it off early if we can
without a penalty fee. We also want as little amount of interest as possible

Melly,

Unfortunately, the ones charging the lowest amount of interest may not be the ones who will allow you to pay off the loan penalty free.

Penalty Free
I recommend the Cahoot Flexible Loan. The APR is 6.9%. You can make overpayments and pay it off completely at any time, penalty-free.

Low Interest
Check out MoneySupermarket which lists some of the best loan deals. The Sunday Times also has a weekly Best Buy table in it's Business section. However, the top 2 loan deals in this week's paper both have a redemption penalty of 2 months interest - ouch!!

Debt_Free_Chick · 13 December 2004 at 12:33PM

Melly,

Penalty Free
I recommend the Cahoot Flexible Loan. The APR is 6.9%. You can make overpayments and pay it off completely at any time, penalty-free.

IIRC, the typical APR is 6.9%, but Cahoot offer different rates to different people, depending on how they credit-score them. So the rate offered may well be higher than the "typical" 6.9%.

As ever, read the small print very carefully to be sure you understand what you are being offered.

Regards

Rafter · 13 December 2004 at 1:50PM

Melly,

If you have a mortgage and some savings and tend to manage your current account without using an overdraft each month, you might be better off with an offset mortgage?

It depends whether you are a mortgage switcher, moving your mortgage every 3 years to chase the latest offer or whether you are happy staying with one provider.

If you like the security of a fixed rate mortgage, then these products aren't for you.

I have one because it reduces my tax bill and gives me total flexibility but you need to be confident you can manage it well.

R.

[Deleted User] · 13 December 2004 at 8:08PM

If you have any savings consider 'lending' them to yourself and then paying them back. You remain in control of the situation and can pay back what you can afford when you can. The risk with this is that you never pay yourself back and then have no savings. But at least you have no debt either!

A secured loan will probably give you lower interest but effectively you are signing an agreement to say -

'you can take away my home if I default.'

An unsecured loan will be higher interest - but you home remains your home should you default.

Another option is remortgaging which again is borrowing against your home. This can give you lower payments and breathing space as the payments are set out over the term of mortgage. However - you are again risking your home if you default, your equity in the home will be reduced and may vanish altogether if interests continue to rise - or if house prices fall.

Whatever you decide - READ THE SMALL PRINT AND DO NOT SIGN ANYTHING YOU DO NOT UNDERSTAND.

advice on best loan please

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