getting a lower rate?

gmboy

I have a relatively small mortgage (but over £50k). Although not in negative equity, the value of my property has reduced significantly since I bought it. Despite making lump sum overpayments I'm at 98% LTV, using a fairly similar property's recent sale price (after many months on the market), though that's first floor, while mine is ground floor with a private garden.

My thoughts on making overpayments were to get below the 85% LTV threshold then get a better mortgage rate (currently 4.49%, out of ERC period). This is proving ever more elusive and I'm wondering about my options. Ideally I'd like to move to a different (better!) area. My salary next month is increasing to around £25k (full time employment). I am not a big spender and can easily afford the current payments, which is how I've been able to make overpayments as well as knock about 10 years off the term.

Would it be feasible for me to get an unsecured loan, sufficient to take me below the 85%, or ideally 80%, LTV threshold to get a better rate? (Up to 13k would be needed.) Would having an unsecured loan affect my ability to get a remortgage? Or any other ideas welcomed.

Thank you.

R_P_W

Surely getting a loan at say 12% would eat away at any gains with a better mortgage rate?

wannahouse

R_P_W wrote: »

Surely getting a loan at say 12% would eat away at any gains with a better mortgage rate?

as above..it doesnt make sense to do that!
and if you can afford to make personal loan repayments of that amount, then just keep paying lump sums off the mortgage until you reach the 85% and then remortgage.

dimbo61

You are now on the SVR and overpay as much as you want.
This is the best way forward until you have built up equity in your home

_Andy_

Doubt you'll find an unsecured loan provider that will lend for that reason.

gmboy

Thanks for the replies so far. Rather than primarily wanting to know whether readers think it's a good idea or not, first and foremost I was asking whether it's possible. In essence my question was whether having a loan would affect my ability to get a (re)mortgage. I gave additional info, pre-empting further questions about circumstances, but I think it may have detracted from the purpose of my question. For example, people take out loans for all sorts of reasons - it isn't always used for the exact named purpose. Also, paying a higher interest rate on a proportion of debt could be cheaper if I were able to get a lower rate on the remaining amount. Exact rates needed would depend on the proportions involved, which I haven't established so far, and the higher the loan interest rate, the lower the mortgage rate needed, so that affects the feasibility of my ideas. Anyway, I have seen a more recent thread with someone asking about a first mortgage and having a personal loan prior to applying. The suggestions are that having a personal loan affects affordability. So perhaps that's the bottom line: the lender's assessment of affordability.

Thanks again.

R_P_W

Not a good idea even if someone would lend.

Thrugelmir

gmboy wrote: »

Thanks for the replies so far. Rather than primarily wanting to know whether readers think it's a good idea or not, first and foremost I was asking whether it's possible. In essence my question was whether having a loan would affect my ability to get a (re)mortgage. I gave additional info, pre-empting further questions about circumstances, but I think it may have detracted from the purpose of my question. For example, people take out loans for all sorts of reasons - it isn't always used for the exact named purpose. Also, paying a higher interest rate on a proportion of debt could be cheaper if I were able to get a lower rate on the remaining amount. Exact rates needed would depend on the proportions involved, which I haven't established so far, and the higher the loan interest rate, the lower the mortgage rate needed, so that affects the feasibility of my ideas. Anyway, I have seen a more recent thread with someone asking about a first mortgage and having a personal loan prior to applying. The suggestions are that having a personal loan affects affordability. So perhaps that's the bottom line: the lender's assessment of affordability.

Thanks again.

Seems as if you are expecting to find an alternative answer. When there's really only one that makes financial sense.

With your small mortgage balance. The cost of remortgaging and servicing the unsecured loan will outweigh any savings on the actual mortgage.

Yorkie1

gmboy wrote: »

Thanks for the replies so far. Rather than primarily wanting to know whether readers think it's a good idea or not, first and foremost I was asking whether it's possible. In essence my question was whether having a loan would affect my ability to get a (re)mortgage.

As you've summarised below, yes it will be taken into account by a mortgage lender and will impact on their affordability assessment of your position.

I gave additional info, pre-empting further questions about circumstances, but I think it may have detracted from the purpose of my question. For example, people take out loans for all sorts of reasons - it isn't always used for the exact named purpose.

This may be true, but if you know you want the loan for purpose A, and state that the loan is for purpose B, then that is fraud - akin to obtaining the loan by deception.

Also, paying a higher interest rate on a proportion of debt could be cheaper if I were able to get a lower rate on the remaining amount. Exact rates needed would depend on the proportions involved, which I haven't established so far, and the higher the loan interest rate, the lower the mortgage rate needed, so that affects the feasibility of my ideas. Anyway, I have seen a more recent thread with someone asking about a first mortgage and having a personal loan prior to applying. The suggestions are that having a personal loan affects affordability. So perhaps that's the bottom line: the lender's assessment of affordability.

Thanks again.

As everyone else has said, this isn't the route to go down.