Loan v Additional Lending

Amitjani

I am considering which is the best option:

I need to borrow £20000 cash to lend to my parents for their house purchase. I currently have a mortgage with Halifax and am considering taking out additional lending against the mortgage or applying for a personal loan.

My research on MSE suggests that I could get a loan from Tesco at 8%APR over 10 years - the total amount repayable being £28780 @ £239 per month.

Halifax are offering me £20000 at 4.69% above the base rate working out at £114 per month over 29 years - by my calculations the total amount repayable will be £39000 approx.

Grateful for any views or advice you may have.

CHR15

£28k or £39k...... Tricky.

Another thing to consider is that Base Rates can only go one way....upwards.

Debt_Free_Dreamer

Are you intending to overpay on the mortgage?

You are not comapring like with like in terms of the payment years. If you intend to overpay and settle the debt in 10 years or less, the payments could be lower. However, there is a risk the interest will move if it is variable.

Can you get a £20,000 loan? That is the other question.

We are having an extension and I can get £56K on the mortage (we need £30K). No way I will get a loan for that much...

Rob71

Amitjani wrote: »

Halifax are offering me £20000 at 4.69% above the base rate working out at £114 per month over 29 years - by my calculations the total amount repayable will be £39000 approx.

If it's based on interest rates, then Halifax is cheaper than Tesco (at the moment).

Why don't you compare like-for-like? See what additional borrowing would look like if it was over the same 10 year period as the Tesco loan.

I've had similar arrangements with HSBC and Natwest, and have usually been able to go for a 5 year term as opposed to the full term of the mortgage.