Pay off Mortgage with a Loan?

mfra75

My mortgage is less than £2,000.00 and the interest is 5.25% (including deductions aftr recent rate cut etc.) It is a repayment mortgage. I am wondering if I'd be better off taking out a loan to clear the outstanding mortgage in full. Any suggestions/ideas would be much apreciated.

Thanks

DON79

A loan interest rate is likely to be higher just now I would have thought. although mortgage rates are coming down, I don't think credit rates have changed and some have gone up (credit cards) so I would be tempted to approach the mortgage company instead and see if they would consider a final settlement with a deduction for early repayment? It might be worth asking at least. How much longer will it take on your normal mortgage to repay the £2000?

mfra75

Thanks for the response, I got another 5 months to pay off the £2000. finishes in March 09. I'll follow your advise and speak with the MOrtgage lender.
Cheers

DON79

Hi, unless you would like some money on top for a little treat to celebrate being mortgage free, then I don't think a loan would be the best idea. Hope you can get a good deal.

jd87

[STRIKE]What about a 0% balance transfer credit card? If you get the right one you will be able to transfer money into your bank account, and then use this cash to pay off the mortgage. There will be a 2.5-3.0% fee for the transfer.[/STRIKE]

Just realised, I really don't think it is going to be worth it for you. 5.25% is the amount of interest you pay each year. Over 5 months there will be less interest than this, probably less than any balance transfer fee you would pay.