Small mortgage or personal loan?

Cossie_2

Hi

My partner and i want to buy a house. We are looking at a very small outstanding balance after we use our deposit, probably £20,000. My question is this, should we take out a joint mortgage for 7 years OR take out a personal loan each for £10,000 for roughly the same repayment time. The monthly payments are more or less the same either way. Are there any advantages to having a mortgage over a loan or vice versa? considering the repayment tine and amounts are roughly the same? Also which one is the quickest to get organised/arranged?

Thanks in advance

Wh05apk

I would be surprised if the repayments were the same?


Few unsecured lenders will allow a loan if you state the purpose as property.


I am getting offers out in less than a week with some lenders, the rest of the process would be the same regardless which route you took.

Cossie_2

Wh05apk wrote: »

I would be surprised if the repayments were the same?


Few unsecured lenders will allow a loan if you state the purpose as property.


I am getting offers out in less than a week with some lenders, the rest of the process would be the same regardless which route you took.

OK the repayments aren't exactly the same but the query was more about the benefits of one over the other. Although as i understood it we could each get a loan for £10,000 and be paying around 4.9% interest. A £20,000 mortgage would have around the same intetest rate? Also, should we tell them the loan was for a payment towards a property or just tell them its for something else, a car for example?

Thanks for the response.

Wh05apk

I would expect your rate to be less than 3% on a mortgage so a bit lower, although really on a small amount the difference is negligible.


If you tell them it is for a car, then technically that would be fraud, so be careful what you ask for.

Cossie_2

Wh05apk wrote: »

I would expect your rate to be less than 3% on a mortgage so a bit lower, although really on a small amount the difference is negligible.


If you tell them it is for a car, then technically that would be fraud, so be careful what you ask for.

Is there a minimum amount a bank or other institution will lend for a mortgage? If I could raise enough that I only need £6000 for example, would they still perhaps say no to the loan but also no to a mortgage because its too little an amount?

Thanks for the response.

Wh05apk

Most lenders have minimums, normally about £20-25k, however Santander are £6,000, have fee free products, and also offer free valuations, and even £250 cashback, so are very attractive to smaller loan sizes where fees can be disproportionately high.

Cossie_2

Wh05apk wrote: »

Most lenders have minimums, normally about £20-25k, however Santander are £6,000, have fee free products, and also offer free valuations, and even £250 cashback, so are very attractive to smaller loan sizes where fees can be disproportionately high.

Are the arrangement times the same for a mortgage regardless of the amount? ie will a £6000 mortgage be approved and arranged more quickly than a £60,000? Also is a loan quicker to arrange than a mortgage?

Thanks for the response.

getmore4less

You could look at something more flexible like an offset.

borrow more and offset it if you don't need it

borrow for longer giving instant access to cheap money

pump in as much money as you can as quick as you can


for short term loan/mortgage cant see much benefit in either go on cost, loan could be cheaper overall fewer fees but a decent mortgage fee free deal might work.

for that level of borrowing the credit card shuffle might work.


if the LTV is low and income good i would be looking around 2%-2.5%