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    • Nige64
    • By Nige64 17th Oct 16, 5:31 PM
    • 11Posts
    • 0Thanks
    Nige64
    Top up loan?
    • #1
    • 17th Oct 16, 5:31 PM
    Top up loan? 17th Oct 16 at 5:31 PM
    Hi folks, I just can't get my head round this, I'm useless at this sort of thing...
    About a year ago we borrowed £6000 against our house with the Nationwide, the repayment was £8000 over 60 months at approximately £133.50 per month. We did this to buy a half decent car as ours was on it's last legs. So far we have made via diect debit, 10 months payments.
    Now.
    The bank has been on to us to top the loan up to £10k with a total repayment of £10,800, which means the interest will be £800 instead of the £2000 interest we're paying on our original loan. They have said we need to repay £5231 out of the new loan leaving us with £4769 cash in hand.......but of course, we'll be starting the new loan from day one and will be paying about £180 per month for 60 months....=£10,800.
    Our heads are going round trying to work out if we'd be better off taking the top up or leaving things as they are? The extra cash would be great as it can go towards an extension, but are we paying more interest? Which way do we go?
    Any help much appreciated
    Nige
Page 1
    • DCFC79
    • By DCFC79 17th Oct 16, 5:49 PM
    • 27,761 Posts
    • 17,530 Thanks
    DCFC79
    • #2
    • 17th Oct 16, 5:49 PM
    • #2
    • 17th Oct 16, 5:49 PM
    I know it might not be a response you were looking for but are you aware of the implications of borrowing against your home.
    Je Suis Charlie
    • Nige64
    • By Nige64 17th Oct 16, 5:57 PM
    • 11 Posts
    • 0 Thanks
    Nige64
    • #3
    • 17th Oct 16, 5:57 PM
    • #3
    • 17th Oct 16, 5:57 PM
    Yes thanks, we knew about that and have a steady income which pays off the debt, I'm retired so the income (I hope) is guaranteed
    • zx81
    • By zx81 17th Oct 16, 5:58 PM
    • 9,361 Posts
    • 9,198 Thanks
    zx81
    • #4
    • 17th Oct 16, 5:58 PM
    • #4
    • 17th Oct 16, 5:58 PM
    What are the interest rates on the old and new loans?
    • Nige64
    • By Nige64 17th Oct 16, 6:08 PM
    • 11 Posts
    • 0 Thanks
    Nige64
    • #5
    • 17th Oct 16, 6:08 PM
    • #5
    • 17th Oct 16, 6:08 PM
    Well the old one is a repayment of £8000, borrowing £6000, £2000 interest over 5 years,
    The new loan is repayment of £10,800 borrowing £10,000, interest of £800 over a new 5 years. To hand I don't have the exact percentage, but I'll go and find it out.

    Edit. We're paying 12.7% at the moment, if we top the loan up it'll drop to 3.4%
    • Nige64
    • By Nige64 18th Oct 16, 9:37 AM
    • 11 Posts
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    Nige64
    • #6
    • 18th Oct 16, 9:37 AM
    • #6
    • 18th Oct 16, 9:37 AM
    Although I go brain dead when it comes to working things out, I think I've found the answer. At the moment we're paying £2k interest on this £6 loan. If we go for the new loan, we'll be paying £800 interest on a £10k loan, so if you add together the £800 + the money we've already repaid, £1330 that totals £2130 interest on a £10k loan, so it's only going to cost £130 more for the extra £4k.............

    I think.
    • ReadingTim
    • By ReadingTim 18th Oct 16, 10:49 AM
    • 1,082 Posts
    • 1,431 Thanks
    ReadingTim
    • #7
    • 18th Oct 16, 10:49 AM
    • #7
    • 18th Oct 16, 10:49 AM
    Whilst you might "need" a new(er) car, you probably don't "need" and extension. If you want a new extension, then save up and pay for it from savings - the bank are trying to sell you something with this top up loan suggestion, so it's going to benefit them, and in my opinion, something that is beneficial for a bank isn't usually beneficial for the customer.
    • enthusiasticsaver
    • By enthusiasticsaver 18th Oct 16, 8:05 PM
    • 2,556 Posts
    • 4,373 Thanks
    enthusiasticsaver
    • #8
    • 18th Oct 16, 8:05 PM
    • #8
    • 18th Oct 16, 8:05 PM
    Are you sure you borrowed against your house for the car or was it unsecured? 12.7% does not sound like a secured loan rate and many banks have minimum loan amounts for secured £10k usually and yes 3.4% sounds like a secured loan rate.

    Personally I would not put any loan for a car on a secured basis. Have you started the extension and how much is it going to cost? If you are in a position to pay £180 per month I would overpay the unsecured loan to get that paid off asap and then consider the extension. Paying £2k interest on a £6k loan is extortionate.
    Debt and mortgage free and saving for early retirement
    • Dobbibill
    • By Dobbibill 18th Oct 16, 9:11 PM
    • 1,724 Posts
    • 2,859 Thanks
    Dobbibill
    • #9
    • 18th Oct 16, 9:11 PM
    • #9
    • 18th Oct 16, 9:11 PM
    Although I go brain dead when it comes to working things out, I think I've found the answer. At the moment we're paying £2k interest on this £6 loan. If we go for the new loan, we'll be paying £800 interest on a £10k loan, so if you add together the £800 + the money we've already repaid, £1330 that totals £2130 interest on a £10k loan, so it's only going to cost £130 more for the extra £4k.............

    I think.
    Originally posted by Nige64
    Just to play devil's advocate and give you another thought.

    You won't have £10k........you'll have £4769 and a car that's a year older

    You will then be resetting the clock to now to begin 5 yrs of payments.
    • redux
    • By redux 18th Oct 16, 9:40 PM
    • 15,567 Posts
    • 18,364 Thanks
    redux
    How about taking the new loan to replace the old, then paying about half of it back almost immediately?

    Or just ask for a pro rata smaller one in the first place.
    • Carrben01
    • By Carrben01 19th Oct 16, 5:07 PM
    • 1 Posts
    • 0 Thanks
    Carrben01
    I have a loan with Nationwide and get a lot of emails about top ups, looking at the email it doesn’t state I am guaranteed to get the advertised rate, see below quote from the email:

    "Mr ****, as you already have a loan with Nationwide we may be able to lend you £10,000.00 at 4.6% APR if you apply before 20 October 2016.

    This example is tailored to you personally but if you want to borrow more or less, or your circumstances change the rate may be different."
    • Gambler101
    • By Gambler101 19th Oct 16, 10:06 PM
    • 60 Posts
    • 122 Thanks
    Gambler101
    If anyone contacts you about an offer, its always in their interest and NEVER yours!

    That applies to everything in life!
    The instructions on the box said 'Requires Windows 7 or better'. So I installed LINUX
    • Bedsit Bob
    • By Bedsit Bob 20th Oct 16, 8:12 AM
    • 9,311 Posts
    • 48,764 Thanks
    Bedsit Bob
    It's not a top up loan.

    It's refinancing the original loan.
    My job is Top Secret. Even I don't know what I'm doing.

    Amount I have so far denied the BBC - £1015-50
    • Bedsit Bob
    • By Bedsit Bob 20th Oct 16, 8:15 AM
    • 9,311 Posts
    • 48,764 Thanks
    Bedsit Bob
    looking at the email it doesn’t state I am guaranteed to get the advertised rate, see below quote from the email:
    Originally posted by Carrben01
    Exactly.

    The phrase that matters is "we may".

    Once you are siting at the desk, you are already half way to taking the loan, irrespective of the APR.
    My job is Top Secret. Even I don't know what I'm doing.

    Amount I have so far denied the BBC - £1015-50
    • Silvertabby
    • By Silvertabby 20th Oct 16, 12:01 PM
    • 372 Posts
    • 401 Thanks
    Silvertabby
    If the original loan wasn't secured (and it doesn't sound like it was) then the new offer won't be either. As Bedsit Bob says, you may not get the lower rate mentioned in the letter - meaning you probably won't as you are retired and are on a fixed income You may find that you end up being offered the top up loan at the same (or very near) rate as your existing loan.
    • nirajn123
    • By nirajn123 20th Oct 16, 5:12 PM
    • 111 Posts
    • 23 Thanks
    nirajn123
    Although I go brain dead when it comes to working things out, I think I've found the answer. At the moment we're paying £2k interest on this £6 loan. If we go for the new loan, we'll be paying £800 interest on a £10k loan, so if you add together the £800 + the money we've already repaid, £1330 that totals £2130 interest on a £10k loan, so it's only going to cost £130 more for the extra £4k.............

    I think.
    Originally posted by Nige64
    Purely from calculation perspective it is so much easier to consider as two separate transactions -
    1. Borrowed £6000, paid £566 interest and £769 principle amount (total of £1335 paid over 10 months) - Balance £5231 [You will settle this with part of a new loan] - Rate 12.7% as you say
    2. New Loan - Total £10,000, Net Loan amount factoring for settled balance of #1 £4769. Interest due over 5years £800 - Your monthly payments will be for this new loan + interest (@3.7 =(£10800)

    Does this makes sense? just making sense of these numbers for you and not advising for or against taking this up.
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