get a mortgage or a loan

lilmissclass

i want to buy a house. It's my first time and I want to know if it would be better to get a loan or a mortgage, or if there even is a difference.

I have about 40,000 deposit and earn 30k a year. I am looking at houses around 100k - so I would be looking around 60k for loan/mortgage

Any help would be greatly appreciated

opinions4u

A mortgage is a loan. The key difference is that if you don't pay a mortgage they can repossess the house that you bought with it!

Find yourself a local whole of market mortgage broker. You need looking after .

lilmissclass

i was unsure if i would be better of with a loan as i would enduo paying less over all than on a mortgage, my mum told me this, but she is frequently wrong

somethingcorporate

lilmissclass wrote: »

i was unsure if i would be better of with a loan as i would enduo paying less over all than on a mortgage, my mum told me this, but she is frequently wrong

It will be almost impossible to find a personal loan rate better than a mortgage rate. The best personal loans are circa 7-8% PA and a fixed mortgage at 60% LTV would likely be 4-5% PA.

No brainer really.

Wutang_2

somethingcorporate wrote: »

It will be almost impossible to find a personal loan rate better than a mortgage rate. The best personal loans are circa 7-8% PA and a fixed mortgage at 60% LTV would likely be 4-5% PA.

No brainer really.

actually its a brainer

getmore4less

lilmissclass wrote: »

i was unsure if i would be better of with a loan as i would enduo paying less over all than on a mortgage, my mum told me this, but she is frequently wrong

Does she have mortgage or a loan?

You have listened to her for how long?

Do you have a free thinking dad?

benjo

Perhaps what your mum means is that a loan would be cheaper ie total money paid since she might presume you would pay it off over a shorter period than you would a mortgage.... examples knicked from a comparison site.

60k personal loan.

Repayment period 10 years.

APR 7.2%

Monthly payment £713

Total paid £85595 = total cost £25595.

Vs

60k Mortgage

Repayment period 25 years

APR (using cheapest variable as an example only) 3.75%

Monthly payment £310

Total paid = £93321 = total cost £33321

So the mortgage costs more because even though you borrow at a better rate, the balance is outstanding for a longer period = you continue to accrue interest for longer BUT........

Assuming you could afford to pay 700 per month, yet used the mortgage option, you would infact pay off your debt in just under 9 years and pay a total of just under 70k ....... a big saving on the personal loan figures.

Disclaimer, I'm not a money professional, all figures are stolen from comparison websites and are not necessarily the best/most accurate examples - but you get the drift?

somethingcorporate

Wutang wrote: »

actually its a brainer

Not convinced myself, assuming all other things being equal (repayment / overpayment terms) a cheaper rate is always better than a higher one! (as Benjo's calculations above demonstrate).

But if you care to disagree then that's fine.

Obviously, this hinges on getting terms equal, but a good mortgage broker should be able to sort you more or less identically flexible terms for a mortgage as a loan and it should become an easy choice.

lilmissclass

getmorefor less, that was not helpful, but thank you for your reply.

Many thanks everyone - that has cleared it up for me. Mortgage all the way for me then