Remortgaging to buy a car

underthematress

My boyfriend wants to remortgage his flat to fund buying a car, he is self employed and will be using dividends as well. I don't know anything about dividends and remortgaging seems a bit frightening to me as I thought most people only did this to make house improvements etc... not buy something that will depreciate like a car.

Any advice welcome.

Kind Regards,

ViolaLass

If he really needs the car, is getting a good value one, has enough equity to pay for it and a good income and LTV etc etc then it may well not be a problem.

But without some details, I can't judge. People remortgage for all sorts of reasons.

underthematress

ok thank you. I will try and get some details from him. I think he pays 2% interest and he would have a good LTV, as he said he had 20k spare when he first bought the flat so put the money into flat. He wants to buy a car at around £15k. He earns a decent income circa £50k.

I'll update later.

Many thanks

getmore4less

Looks cheap way to buy a car on monthly payments but you have to overpay to make it work long term.

If the mortgage is on a low rate any extra borrowing will be on a higher rate.

ILW

Many did similer a few years ago, what they didn't seem to grasp was that they would be paying for the car for the next 20 or so years.

bungle4by4

20 yr car loan, scary stuff.. can't say i'd be willing to do that.

adwat

Cheapest way of borrowing is on your mortgage. As long as he increases his payments to pay off the extra borrowing over (say) 12 months, so he doesn't end up paying for it over the whole term of the mortgage, then it's a sensible way of borrowing.

JQ.

At first I was going to slate your BF for being an idiot, but running the numbers it does not sound that bad.

£20k car over 23 years at 2% interest will cost circa £5.5k
£20k car over 5 years at 9% interest will cost circa £5.5k (unsecured personal loan)

Just make sure he overpays and gets the additional lending paid off in the next 5 years and he'll be absolutely quids-in.

However, the above does assume his interest rate stays at 2% for 23 years, which is very very unlikely. If it stays at that rate for the next 5 years it will be a miracle. So actually, make sure he pays it off in the next 2-3 years.

ViolaLass

Well, obviously, if he can get the lower rate and stick to the overpayments, then it would work. Thing is, that's not the full picture - will he get the same rate on the extra borrowing (and will it stay so low)? Does he really have enough equity?

(And then there are my personal concerns about spending that much on a car... but that's just me. I don't think we have enough information to judge e.g. value and LTV on house are needed).