What would be the best Loan

aphill24

I have an endowment policy maturing in June for £12,100.

I have savings of £3k

I have a £10k car loan with Nationwide at 5.9% paying £232 pm This was taken out in November 2012 and I will be paying back £11,136 in total. I have made four payments so owe roughly £9k


My mortgage balance will be £7,000 in June and it is also with Nationwide at a rate of 2.39% for the rest of the loan which finishes in February 2015. I currently pay £371 per month.

I want to fit a new kitchen which involves some building work and will cost around £15k

What would be the best way to finance my Kitchen? I have an appointment with the Nationwide tomorrow and do you think I should consolidate my loans ie, the car loan and the remaining mortgage and use my endowment and savings to fund the kitchen/build work.
I believe I can get an advance on the house at a rate of 3%
The loan has a 30 day interest penalty which will be around £50

Any advise would be appreciated before I go to the Bank.

I owe £500 on a CC which I hope to pay of in the next 6 weeks

poppasmurf_bewdley

Why not just wait the couple of months until June and use your endowment and savings to pay for the kitchen, and not pay any interest at all?

And £15k for a kitchen? That must be some kitchen.

Rafter

All depends on whether you want to put your house at risk just to reduce the cost of your car loan.

If that is the case I would look at an offset mortgage from HSBC or first direct borrowing around £25k (if that is above their minimum). Think about the fees and valuation costs for a mortgage that small - they can have a big impact on the effective rate you are paying.

With that mortgage in place you can then pay off your car loan, pay for your kitchen and then put the proceeds of your endowment into your offset savings when it comes through.

You just need to be strict with yourself about putting enough money into your offset savings to repay your kitchen and car loan so you aren't still paying for these long after you have sold the car or got value out of the kitchen.

Good luck

R.

aphill24

Thanks both. I have been in to see a mortgage advisor today and I am going to use my endowment to pay for the Kitchen and building work. I was hoping to save some interest by putting my car loan on the advance from the house but it was not really that straight forward as I would have had to increase the term of the mortgage which incurred more interest cancelling out any savings I was hoping to make,

somethingcorporate

Although Nationwide do allow £500 per month over-payments without penalty so as long as you paid it back at the same rate assuming the car loan was at a higher rate you would still have been better off.

Probably best keeping the unsecured finance this way though.