Any limit on how early you can pay off a loan?

1DayAAT

Hi guys,

Bit of a weird one, but I took out a Sainsburys loan this month for £5000 over 5 years, with a schedule of paying about £100 p/m. However, due to a change of circumstances, I am going to now probably be able to pay this loan off in a month or two as I am consolidating my loans in to a re-mortgage plan.

Will they mind if I make such an early repayment to this loan or would it be better for me to carry it on for about a year for credit rating reasons? It was just an unexpected change of arrangements that came in shortly after I took out the loan that has led to this. I feel it would be better to pay it off to limit the interest payments but not if it is going to cause any undue hassle.

Thanks for any advice on that if any of you have any experience of imput
Charlie

iancrt

Assuming you have considered all the implications of moving unsecured debt to being secured on your house, no there shouldnt be any problems paying the loan off early. There may be charges, and probably be interest to pay.
Read the bumph that came with the loan only that can tell you exactly what can/will happen.

ReadingTim

I don't think you can be prevented from repaying a loan early if you really want to, but you can be hit with various fees/pentalties etc, which can make what seems like a good idea in theory turn into a less good idea in practise - check the documentation which was given to you when you took out the loan, or call the bank and ask for an early redemption figure.

However, is it really a good idea to turn an unsecured loan over a relatively short period into a secured loan over a far longer period?

1DayAAT

Thanks, yeah I guess it will be sensible just to call up when the time comes and get the figure due back with any charges and what not.

The reasons for the re-mortgage are complicated but have been established as the best option long term for the situation we are currently in. Thanks again.

telboyo

Just remortgage your house and keep the Sainsbury loan running, spend any excess money on Christmas. Wait 6 months and then repost about a mis-sold loan!