Mortgage draw down facility...

molly22

:rotfl: I have a mortgage drawdown facility on my tracker mortgage.
it tracks 1% above the bank rate, so at the moment its a very good mortgage to have!

i want to buy a new car and am thinking of using the drawdown to enable me to do this.

i currently owe £78,000 and am thinking of borrowing £12000. this would cost me an extra £20 p.m. whilst the interest rate is low, but obviously more when the interest rate rises.

i have an endowment which will mature in sept and should achieve £5000 which i will pay off.

is this a wise thing to do in the current climate??

thanks for any help

molly

paulfaz

Sounds a cheap way to borrow to me, however I would argue that buying a 'new' car with it is not particularly wise.

molly22

thanks paul

i dont mean 'new' car, its a couple years old.

you any ideas for a car? must be auto with 4 doors and nice to drive

x:rotfl:

Robert_Sterling_3

If you would otherwise borrow to buy a car then mortgage draw down is the way to go.
A two year old car with a guarantee is also the way to go.

:T :T :T

opinions4u

molly22 wrote: »

i want to buy a new car and am thinking of using the drawdown to enable me to do this.

Sounds like you can do it. My only caution would be to ensure you don't end up borrowing for a car over more than 3 or 4 years. Are you disciplined enough to do this?

i have an endowment which will mature in sept and should achieve £5000 which i will pay off.

Or, if your mortgage rate remains at 2%, a basic rate taxpayer could invest in a savings account paying over 2.5% and guarantee a profit over and above the cost of borrowing the money. Post again nearer the time and users may be able to identify a safe way of making you a nice risk-free profit.

is this a wise thing to do in the current climate??

My only concerns are:

1) Using equity in your house to buy something that isn't going to add value to your property in a time of falling property values. This could restrict your ability to get the mortgage you need should you wish to move house or renegotiate your existing deal at the end of the tracker.

2) How often do you replace your car? Don't borrow for longer than this period !! If the mortgage only structures you payments over the remaining term, you need to work out how much you would have paid for a loan over 3 and 4 years and save the surplus in to a regular saver type account (e.g. Halifax or Barclays) with a view to paying a lump sum off your mortgage in future.

getmore4less

Check that the drawdown is at the same rate as the mortgage.

Plan to pay it off quickly before the next car change.

£12k is a lot of car,

here is one for £7k
http://www.motorpoint.co.uk/(S(0i1jrffrowoe0e45bmsj1t45))/Search/VehicleDetails.aspx?vehicle=222601


I would look at running costs as well. so cheap tax and good fuel consumption.