Pay off your mortgage with an unsecure loan or 2

I've just paid off my mortgage with 2 loans. :j
Mortgage remaining 13 years 27.5k
My fixed rate was comming to an end so I started looking to switch to get myself a better interest rate. But I soon found that because I owed so little (to them) nobody would give me a competative interest rate.
I came across an Alliance and Leicester leaflet that was offering 20k fixed term unsecured loans over 5 years at 5.9%, so I started looking round for the other 7.5k. Which I secured with LloydsTSB. 6.4%
I've now cleared my mortgage, my monthly payments have almost double.
But look on the bright side I'm mortgage free, (what a feeling) my loans are unsecured, I'll be debt free in 5 years, and I'll have saved my self thousands in interest payments.

If any1 of you opts to follow my lead, whatever you do, don't tell the lenders what the money is really for, because they wont lend it you.
Good Luck Chaps

Replies

  • roswellroswell Forumite
    2.4K Posts
    ✭✭✭✭
    That removes a lot of the flexability though, as you have said your payments have doubled .. thats the minimum you can pay that all fine but its not as flexable as being 9 years ahead on your mortgage so giving youself a buffer if you loose your job or fall ill.
    If it doesnt pay rent sell it.
    Mortgage - £2,000
    Updated - November 2012
  • If I lost my job or became ill or critically ill, I have protection. in place. I also have a fare amount of share's that I could cash in in an emergency. So why take the loans on I hear you ask, because at present I'd have to pay tax on 2thirds of them. And I don'twant to do that. :beer:
  • Hi, I just popped into fool.co.uk and ran a quick mortgage check. ING direct are doing a 13yr repayment mortgage at 5.5 apr for £245 with no fees. There didn't seem to be any penalty for making overpayments.
    The same mortgage on a 5yr repayment comes to 5.5 apr and £523.89 monthly repayment (no arrangement fees).

    I also found a 5 yr repayment mortgage with HSBC fixed for 5 yrs at 5.6% with monthly repayments at £525.30 again with no arrangement fees.

    The fool rates were just a 2 minute internet search, but I'm certain you could get better rates by going through a specialist mortgage broker - Martin has written a piece on how to get this advice for free and it's in the Mortgage section of the main site.

    I'm into innovative ways to pay off a mortgage, but from what I can see, you still have the mortgage but now it's moved onto a higher interest loan where if you get into trouble the lenders will be less sympathetic to late repayments than if it were a mortgage attached to a family home.
    Mortgage Free in 3 Years (Apr 2007 / Currently / Δ Difference)
    [strike]● Interest Only Pt: £36,924.12 / £ - - - - 1.00 / Δ £36,923.12[/strike] - Paid off! Yay!! :)
    ● Home Extension: £48,468.07 / £44,435.42 / Δ £4032.65
    ● Repayment Part: £64,331.11 / £59,877.15 / Δ £4453.96
    Total Mortgage Debt: £149,723.30 / £104,313.57 / Δ £45,409.73
  • Thanks for looking into this for me, felt a bit of a fool after reading your note, that was until I looked into your examples.
    Had I opted for the 13 year repayment I could have ended up paying back an extra £6,387. (more or less depending on the interest rates over the next 13 years
    The ING 5 years repayment mortgage was not fixed rate, leaving me wide open to interest rises which is what I wanted to avoid
    And I'm going to pay an extra £60 over the full 5 yrs, than I would have on HSBC's which isn't too bad, considering
  • tigtag02tigtag02 Forumite
    6.9K Posts
    Fair point on the IR (worth the risk though IMHO) BUT by taking the 5yr repayment mtg's DD has quoted is surely better than the IR's on your loans :confused:
    :heartpuls baby no3 due 16th November :heartpuls
    TEAM YELLOW
    DFD 16/6/10
    "Shut your gob! Or I'll come round your houses and stamp on all your toys" The ONE, the ONLY, the LEGENDARY Gene Hunt :heart2:
  • mah_jongmah_jong Forumite
    1.3K Posts
    Mortgage-free Glee!
    Once my mortgage finished its last deal, it was under 10k, I went to the Building Society and they gave me a good rate anyway (under the variable rate), I continue to overpay, so instead of the the 13 years left to run it will be ended in 2.

    I started this mortgage with the scottish building Society 7 years ago. I could not get a deal initially (indeed had to shop around to get a mortgage at all), I have nothing but praise for them! I was able to pay capital payments and overpay monthly.
  • Kandyfloss wrote: »
    Thanks for looking into this for me, felt a bit of a fool after reading your note, that was until I looked into your examples.
    Had I opted for the 13 year repayment I could have ended up paying back an extra £6,387. (more or less depending on the interest rates over the next 13 years
    The ING 5 years repayment mortgage was not fixed rate, leaving me wide open to interest rises which is what I wanted to avoid
    And I'm going to pay an extra £60 over the full 5 yrs, than I would have on HSBC's which isn't too bad, considering

    Sorry, it wasn't my intention to undermine your decision to use loans to pay off your mortgage, I was just proposing alternatives in case there were other people in your position and wondering which strategy to use. As I mentioned in my previous post, Martin has an article about getting free advice from mortgage brokers, and I'm sure that they have access to a huge variety of specialist mortgages, certainly more than https://www.fool.co.uk which is a broad appeal website and so would probably be easy to beat for low rates on smaller mortgages.
    Mortgage Free in 3 Years (Apr 2007 / Currently / Δ Difference)
    [strike]● Interest Only Pt: £36,924.12 / £ - - - - 1.00 / Δ £36,923.12[/strike] - Paid off! Yay!! :)
    ● Home Extension: £48,468.07 / £44,435.42 / Δ £4032.65
    ● Repayment Part: £64,331.11 / £59,877.15 / Δ £4453.96
    Total Mortgage Debt: £149,723.30 / £104,313.57 / Δ £45,409.73
  • no offence taken.:o
This discussion has been closed.
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