is this loan a bad idea

treading_carefully

What about this idea....and it works for some people but not all. It depends if you have good equity in your house and what the early repayment charges are on existing mortgage. You are paying a whopping 6.4% on your mortgage balance when interest rates are at 0.5%. Is it viable to switch to a much cheaper fixed rate on current deals and borrow the extra £15k on same new deal. It only works if the reduced payments due to the lower interest rate beats any charges for switching mortgage with early repayment charges, arrangement fees etc. But definitely worth a look. You may be able to do it with existing mortgage company.

piltonvet

treading_carefully wrote: »

What about this idea....and it works for some people but not all. It depends if you have good equity in your house and what the early repayment charges are on existing mortgage. You are paying a whopping 6.4% on your mortgage balance when interest rates are at 0.5%. Is it viable to switch to a much cheaper fixed rate on current deals and borrow the extra £15k on same new deal. It only works if the reduced payments due to the lower interest rate beats any charges for switching mortgage with early repayment charges, arrangement fees etc. But definitely worth a look. You may be able to do it with existing mortgage company.

early repayment fees are £2480
currently owe £58,489 so total id have to repay is £61,091
current mortgage is £475.00 a month,if they let me remortgage with them at this rate

4 Year Fixed Rate - Fee Free 4.69% that works out to £588.00 a month over a 15 year term

hopefulfooluk

Chances are, if you are asking the question "is this loan a bad idea", then it most probably is. You know the trouble you've had with credit in the past and consolidation is never, ever a positive step forward unless you know that the causes of these past problems are behind you.

Also securing what is currently unsecured debt on your home is a very very bad idea if you don't have to do it. Don't forget the whopping interest you'll be paying over 15 years on a 15 grand loan - will probably cost you far more in the long term than you think.

Currently without the loan you'll be paying back £83,700 over the 15 years - with the £15k added on you'll actually be paying back £105,840 - so if you take this 15k, it'll cost you an extra SEVEN THOUSAND POUNDS.

Doesn't look like a good idea to me - just think VERY carefully before doing it.

piltonvet

hopefulfooluk wrote: »

Chances are, if you are asking the question "is this loan a bad idea", then it most probably is. You know the trouble you've had with credit in the past and consolidation is never, ever a positive step forward unless you know that the causes of these past problems are behind you.

Also securing what is currently unsecured debt on your home is a very very bad idea if you don't have to do it. Don't forget the whopping interest you'll be paying over 15 years on a 15 grand loan - will probably cost you far more in the long term than you think.

Currently without the loan you'll be paying back £83,700 over the 15 years - with the £15k added on you'll actually be paying back £105,840 - so if you take this 15k, it'll cost you an extra SEVEN THOUSAND POUNDS.

Doesn't look like a good idea to me - just think VERY carefully before doing it.

looking at it that way i can see your point,think i`ll look at life of balance transfers for the credit cards and a small loan for a car as i REALLY do need a car at the moment ,when the fixed term is up hopefully get a better mortgage deal then with what i save i can use that to help pay off rest of debt