Remortgaging

typeractive

Hello everyone,

I'm looking at remortgaging my house to treat myself to a car. I already know this is NOT MSE philosophy, and have debated about not buying it and chipping away at the mortgage. I have approx £65k equity in the house, after devoting near 3 years putting life on hold to rennovate-blood,sweat and tears...not to mention money. I might even have more money in the house as that is comparing to the other houses on the market (at a less price than they are selling for, and mine is way more modern, energy efficient, desirable than them).

The mortgage is low, but not low enough to say pay off in 5 years kind of scenario. I could do 10 years, but it would mean 10 years with no treats, and I'm wanting to find a bit of a balance. I really think I deserve a treat, and I guess I've always been so cautious I'm just looking for reassurance probably (silly I know).

From doing some maths on moneysupermarket. I could remortgage, take out £20k for the car (and some other repairs I wish to do on the house). Comparing the repayment of existing mortgage, and term it works out to be £50 a month more payment on my existing mortgage. If I reduce the term by say an extra 5 years, it means I pay an extra £100 a month.

I've just had a promotion at work, which will equate to a near £150 pay rise per month. So, on paper remortgaging the house seems the best way to buy the car. It would almost be unoticable and I can manage it as I'm a good saver. I know insurance and petrol will go up.

Just wondering if anyone has any opinions upon remortgaging. Surely there's no way a personal loan could be cheaper? I also don't want any alternative cars at the moment (which I've considered). I could buy this one, then sell it in the future to buy a cheaper one. As I say I'm just trying to air my thoughts / get reassurance that I'm not making an unforseen mistake. I know cars depreciate (unless rarely exotic).

I've compared the term of mortgage against the 5 year term of a personal loan, and they work out I'm paying nearly EXACTLY the same interest across the span of the borrowing.

Any general opinions. Maybe I'm doing the maths wrong (well moneysupermarket). hehe Just sounds a bit too easy.

Thanks
:beer:

Thrugelmir

Lenders normally advance funds for "Home Improvements".

Your choice as to how you spend your money.

Personally I wouldn't waste 3 years of hard work on a £20k whim that'll depreciate away.

kidmugsy

typeractive wrote: »

I'm looking at remortgaging my house to treat myself to a car.

I really think I deserve a treat

Don't be silly - buy a motorbike, they're far more fun.

typeractive

Thrugelmir wrote: »

Lenders normally advance funds for "Home Improvements".

Well if they come to visit me, I'm gonna be a bit stuck, as it's all done (though I want a new roof). Hmmm - can I not just be honest and say a car?

Your choice as to how you spend your money.

Personally I wouldn't waste 3 years of hard work on a £20k whim that'll depreciate away.

Well this is all true, and I hear you entirely. I know the money overall will be 'wasted', though I really like cars, don't spend on any other hobbies, barely drink, don't smoke etc. So it's a treat. I like saving, but can't take it all with me at the end of the day (not that I've saved enough to be in that position). I can buy the car, reduce the term of the mortgage, and still save (hopefully) with the purchase.

typeractive

kidmugsy wrote: »

Don't be silly - buy a motorbike, they're far more fun.

hahahah :eek: that made me chuckle! I do not doubt for any one second that they will be much more fun, I've never been on one and find the thought scary! hehe I don't even want a RWD car, otherwise I'd consider a beema. Quattro all the way for me. A bit more understated, refined, great interiors. Just don't want to part with my little old audi either - had it nearly 9 years and grown fond of it. :o

Thrugelmir

typeractive wrote: »

Well if they come to visit me, I'm gonna be a bit stuck, as it's all done (though I want a new roof). Hmmm - can I not just be honest and say a car?

You'll have replaced the car before paying off the mortgage.

A roof doesn't cost £20k plus to replace.

You could build an extension for the sum you wish to borrow.

typeractive

Thrugelmir wrote: »

You'll have replaced the car before paying off the mortgage.

Yep..though kept my current car for near 9 years. Could probably pay my mortgage in 15 years at a rough estimate, probably less.

A roof doesn't cost £20k plus to replace.

Yep.

You could build an extension for the sum you wish to borrow.

Yep, though I don't have any space to build out or up. I've pretty much fully converted the house.

When I remortgage will they send someone out to look at what they're loaning against? Or work the maths out on paper, with location and ltv? (though surely the value is what they estimate it at). I'd still like to be honest about where I plan to spend my monies.

I appreciate you're not quite in the same mindset of how I wish to spend my money, though I already pointed out it isn't MSE.

At the end of the day, I could save and save and save to pay the house off, but why put a bit of fun on hold, when (by the looks of things) I can buy my dream car, and pay the house off in a relatively short time?

Thrugelmir

typeractive wrote: »

I appreciate you're not quite in the same mindset of how I wish to spend my money, though I already pointed out it isn't MSE.

I'm merely putting a lenders hat on. Lenders are people as well. So not advisable to treat people as being stupid. As they've seen it all before. Normally 6th sense kicks in after years of handling finance matters.

Lenders are being cautious currently. Tightening down across the board.

typeractive

I appreciate the help. So my question remains, is it likely they will come and value my house prior to loaning? i.e. is that standard practice? and saying it is for a car is a bad thing. I'm not trying to hide anything.

Using safe market estimations, against the money outstanding on the loan, I have approx 70% equity. It's a pretty safe gamble for a lender. If I default and they seize then they're quids in?

As we chat I'm doing extensive calculations to configure the most efficient mortgage lending, allowing me to save, and buy the car at the lowest rate, whilst live 'comfortably'.

Thrugelmir

Ring and find out. You can only ask.

You could always borrow the money over a shorter time frame than your current mortgage.

typeractive

Thrugelmir wrote: »

Ring and find out. You can only ask.

You could always borrow the money over a shorter time frame than your current mortgage.

Yeah that's what I'm planning on doing. Currently I have 22 years remaining. I can 'comfortably' get this down to 16 years, allowing me to chop down the term, buy my car, and save a decent sum each month. After the fixed term this cash could then be thrown back into the mortgage etc.

At the moment I'm just going to shop around with my known term, money wanted and the terms I have decided upon. See which are the best deals on that.