Mortgage Vs Loan

Hamster14

Hi Guys,

Just wondered if anyone could help me with a pro's and con's to taking out a mortgage to buy a home vs taking out an unsecured loan.

Myself and my wife both work full time - We *only* need around 40k for the house, So was wondering if two smaller loans would be better than a mortgage maybe? I'm not sure, so any advice would be appreaciated!

Cheers!

~Beanie~

The first thought that comes into my mind is that the interest rate will be cheaper on a mortgage, surely?

Are you sure you would both qualify for a £20K loan each?

Dan-Dan

The repayments over 5 years (usual term length of large unsecured loans) on 2 x 20k would dwarf the equivalent on a mortgage loan

Hamster14

Yeah we tested this out and went in branch and were accepted for a Santander loan each at just over 4% which is obviously fixed and unsecured. It's over 5 years making the payments perfectly managable.

I suppose I'm wondering if there is anything else I should be taking into account rather than focusing on the interest rate?

CLAPTON

interest rates for the loan

interest rates, mortgage fees, solicitors for mortgage

at 4% for the loan with presumably no costs might be very reasonable

dimbo61

£20K is not a small loan and two loans of £20K add up to £368.33 per month X 2 so £736.66 per month at 4.0%
If you can get that rate?
Now on the Santander website it shows 4.5% for 123 account customers and APR Representative of 6.9% on loans of £20K

G_M

An unsecured loan is preferable to a Charge on a property.

A lower interst rate is better than a higher interest rate.

A loan is granted on the individual - a mortgage is granted on the individual AND property (so property hoops to jump through)

If no mortgage is involved it is more advantageous to DIY the conveyancing than if a mortgage is involved.

Hamster14

Thanks guys - it looks as though the loans are the way to go with the fixed interest rates and savings on arrangements fees etc...