Personal loan to augment LTV?

SamF1990

Hi.

I'm looking for some advice.

My partner and I are first time buyers with a basic combined income of around £56k a year(comfortably over 60k when take into account overtime.

We have no debt other than student loans and a faultless credit history.

We have got a decision in principal for a mortgage of up to 200k.

We are looking to buy a house for only £70k with us putting down a deposit of £7k.

With rates so low we are planning on overpaying the mortgage as our wages can allow. We are looking at a 5 year fixed rate of 5℅.

My question is would getting a personal loan for £7k over 2 years on top the £7k we are providing be a worthwhile move?

My theory is that it will reduce our LTV improving the mortgage rate and provide a slightly better rate than the mortgage for the £7k borrowed - around 4.5% fixed.

I realise that this increases our exposure in terms of monthly costs but it should result in less money paid in the long term?

Any more details required please ask.

Much appreciate any advice offered!

mrginge

You have the income to pay the mortgage off in full within 2-3 years.

If you are overpaying, a 7k loan is going to cost you more in interest than you would save by the lower up front ltv.

Thrugelmir

Why such a small saved deposit? Surely you can save another £7k in a relatively short period of time.

ytfcmad

Can you buy a house for £70k these days?

SamF1990

Thrugelmir wrote: »

Why such a small saved deposit? Surely you can save another £7k in a relatively short period of time.

Because we are currently renting - I haven't done the figures but I would be surprised if the benefits of a bigger deposit outweighed the money lost to renting.

Also, yes you can get a house for £70k

Welcome t' north - 2 bed terrace comfortably available for £70k - that's in a livable state! I've seen projects as low as £25k!

SamF1990

mrginge wrote: »

You have the income to pay the mortgage off in full within 2-3 years.

If you are overpaying, a 7k loan is going to cost you more in interest than you would save by the lower up front ltv.

Thanks for this :-)

We were looking to pay it off by overpaying 10% of the remaining debt each year.

I'd ideally want a mortgage with a fixed rate that allowed unlimited overpayments but would be surprised if such a mortgage exists?

JSR

I'd ideally want a mortgage with a fixed rate that allowed unlimited overpayments but would be surprised if such a mortgage exists?

First Direct allow unlimited overpayments in the fixed rate period. Just don't overpay so much you pay it all off.

Thrugelmir

SamF1990 wrote: »

Because we are currently renting - I haven't done the figures but I would be surprised if the benefits of a bigger deposit outweighed the money lost to renting.

Borrowing the deposit will do you no favours. Potentially extremely negative in fact.

Cat2011

SamF1990 wrote: »

Thanks for this :-)

I'd ideally want a mortgage with a fixed rate that allowed unlimited overpayments but would be surprised if such a mortgage exists?

Santander have mortgages with no early repayment charge.