Convert Mortgage to a Loan??

Dali_2

I have a 20,000 mortgage on my property which is now worth 120,000. I pay 160 per month and have 18 years left on the term of the mortgage. However I am considering taking out a secured home loan instead so that I can be free of the mortgage.
Its possible I may sell the property some time in the next 18 months but would be purchasing a similar valued property in the UK.
My mortgage rate went up slightly when the Halifax gave me permission to rent the property out (I think by .5%).
I lived in the property for 6 years but am currently living overseas and renting it out for 420 per month and using the profit on the rental income to subsidise myself.
Should I stick with the mortgage or convert to a secured loan? I could afford to increase my repayments to around 200 per month and want it paid off as soon as possible. Also I have 3000 in investments and 1000 in premium bonds together with 3000 in the bank.

JoeK_3

Dali wrote: »

I have a 20,000 mortgage on my property which is now worth 120,000. I pay 160 per month and have 18 years left on the term of the mortgage. However I am considering taking out a secured home loan instead so that I can be free of the mortgage.

You can only have a secured loan, if you have a mortgage.

A mortgage loan is a first charge secured loan anyway and because of this, it will always be cheaper than a second charge secured loan.

Dali wrote: »

Its possible I may sell the property some time in the next 18 months but would be purchasing a similar valued property in the UK.

You will have to pay off your existing mortgage anyway and then subject to the new property value, take out a new mortgage.

Dali wrote: »

My mortgage rate went up slightly when the Halifax gave me permission to rent the property out (I think by .5%).
I lived in the property for 6 years but am currently living overseas and renting it out for 420 per month and using the profit on the rental income to subsidise myself.

Greater the risk to the lender, the higher the interest rate charged. At least they allowed you to rent out the property. They could have refused!

Dali wrote: »

Should I stick with the mortgage or convert to a secured loan? I could afford to increase my repayments to around 200 per month and want it paid off as soon as possible. Also I have 3000 in investments and 1000 in premium bonds together with 3000 in the bank.

I would stay as you are with the knowledge that you are to sell soon.

You may incur unknown or unplanned for costs when you sell and your existing capital will come in handy then.

JoeK

inmypocketnottheirs

I would consider converting the mortgage to a shorter term. Why not contact your existing lender and ask them to quote for 10 year repayments. A friend of mine, who has several buy to lets and investment properties overseas has all his borrowings over 10 years.

JoeK_3

inmypocketnottheirs wrote: »

I would consider converting the mortgage to a shorter term. Why not contact your existing lender and ask them to quote for 10 year repayments. A friend of mine, who has several buy to lets and investment properties overseas has all his borrowings over 10 years.

Why incur unnecessary costs when the OP is changing mortgages anyway.

JoeK

homer_j_3

I would look to see if you could just overpay each month by whatever you can afford and that in turn will bring the term of the loan down naturally.

If your mortgage cannot facilitate this then you can always put that extra money into a savings account to use when you come to change the mortgage or.

You could look to pay a small admin fee to reduce the term but only if the interest you are saving outweighs the admin cost and that the overpayment is sustainable until you change mortgages.

plane_boy2000

Agree with Homer - why go to the hassle of changing for a realativly small loan - just look to overpay if and where you can