Remortgage

money.matt_2

First time poster, be gentle.

I think this idea is madness, but wanted to check!

It is time to re-mortgage. I have £106K outstanding and 19 years remaining. I know I can save £100 by re-mortgaging (from £700 a month to £600). At the moment we generally break even each month, but it is very tight.

I also have a car loan at £100 a month, that is due to run for 3.5 more years (so £3.5K left).

I'm presuming it would be madness to roll the car loan into the mortgage. This would make the mortgage cost £620 a month. So, this would "save" me £180 a month in the short term (re-mortgage and car loan disappearing) which would be lovely. However I think my future self would not thank me for extending the time to pay off the mortgage.

Matt

mij544

If you added the car loan in and were then paying it at a lower interest rate, there is no reason why you couldn't overpay your mortgage with the money saved to remove the car loan again.

Basically, if your mortgage allows overpayments, and you could add the loan to your remortgage (if you intend to switch rates anyway) All you would be doing is paying the car loan off over the same period, but at a lower rate.

Sit down and do the calculations to see if it is worth it, and don't forget that the extra amount could make the rate on your mortgage less competitive if it made you move into a higher loan to value band.

Hope this makes sense!

herbiesjp

Ideally, turning unsecured debt into secured debt is not the way to go.

However, due to your finances being tight it could well be a good option for you.

As stated above, making overpayments will pretty much bring you back to the same level - but you have the flexibility of doing this as and when you want. You have to be disciplined enough to do this though, as it is all too easy to "forget" the overpayments and "enjoy" the extra cash.

Make sure you are getting the absolute best deal for your remortgage as that will help save you money on the mortgage side to help clear the car loan more quickly.