Using Mortgage to pay off car

edited 30 November -1 at 1:00AM in Mortgages & Endowments
13 replies 1.6K views
Topgun10Topgun10 Forumite
2 Posts
edited 30 November -1 at 1:00AM in Mortgages & Endowments
Hi guys. First post.

I have taken the time to read through the topic on this but I just need some clarification.

I have just got my first mortgage with my partner (with a 10% deposit). I have my car on PCP with Audi and I'd like to have more money monthly. I'm not 50% through my 4year PCP deal yet and can't hand back. I can, however, buy my car outright and I'd like to put it on the new mortgage, 'sell' the car immediately afterwards and then, pay 2-3 chunks off the additional finance used from remortgaging. I think we can pay a maximum of 10% overpayment per year.

On paper, it seems sound. And I'm being responsible. I'd 'like' to pay this off and have more money monthly. I realise the car is a big outgoing.

Anyway, I think I'd need to wait 6 months before approaching NATWEST to do this anyway so if anybody can offer some experience or sound advice, I'd really appreciate it. 👍🏻

Rob.
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Replies

  • Alter_egoAlter_ego Forumite
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    You can't put a car on your mortgage
    I am not a cat (But my friend is)
  • You will be remortgaging at 95% LTV (that's if the additional 5 % paying off the car and if this is even possible) with higher interest rates plus further arrangement fees so may not necessarily have more money monthly as you expect.
  • PBAPBA Forumite
    1.5K Posts
    You certainly can put a car on a mortgage. Whether it's sensible or not is another question.

    The bank will be concerned that the expected life of the car will be much shorter than the likely life of the mortgage, so they will want to know how you're going to pay for the car's eventual replacement. And Natwest will only offer additional borrowing up to 90% LTV, so if that's what you're borrowing now you'll have to wait for the property to go up in value (and pay an additional valuation fee).
  • Remember you would be turning finance secured on your car into finance secured on your home. If you had to chose what to pay it would be your mortgage - if they take your car away theres always the bus. If they take your home away then its a different story......

    But with the numbers you quote there is very little chance you could remortgage so soon, there may be ERP's, and you would be very unlikely to take your mortgage above 90% LTV as others have said.
    Total Credit Used...=........£9,000 / £52,700
    Mortgage..............=........£138,000 , 20 Years left.
    :starmod:CC cashback for this year..=........£112.88 £205.81 banked in 2015
    :starmod:YNAB User & Mortgage Free Wannabe
    :starmod::A19/03/16
  • I think its like all these things - mathematically seems like a workable solution in the short term but once you throw in all the factors it doesn't seem to add up..
    Total Credit Used...=........£9,000 / £52,700
    Mortgage..............=........£138,000 , 20 Years left.
    :starmod:CC cashback for this year..=........£112.88 £205.81 banked in 2015
    :starmod:YNAB User & Mortgage Free Wannabe
    :starmod::A19/03/16
  • getmore4lessgetmore4less Forumite
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    can't you just sell the car and pay off the finance/PCP at the same time.

    no need to mess with the mortgage.
  • elantanelantan Forumite
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    I did this, and added in credit cards etc ... But we were 50% LTV,

    It freed up quite a lot of money which I used to pay off the mortgage, effectively going from 7.95% interest on the car and 19.9% on the credit cards to 3.29% interest in the mortgage, so saving us money as well.

    You have to be very strict with yourself though, can you do that ?
    march 2011-july2019 8 years and 4 months ... or 100 months and counting
    "what would you do if you knew you couldn't fail.... enjoy the adventure" " to my own self be true"
  • HappyMJHappyMJ Forumite
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    elantan wrote: »
    I did this, and added in credit cards etc ... But we were 50% LTV,

    It freed up quite a lot of money which I used to pay off the mortgage, effectively going from 7.95% interest on the car and 19.9% on the credit cards to 3.29% interest in the mortgage, so saving us money as well.

    You have to be very strict with yourself though, can you do that ?
    At 50% LTV your strategy can work. It wouldn't work at 90% LTV.

    Technically though it doesn't save money. I'll assume a car loan of £10,000.

    A 7.95% personal loan over 5 years would cost £2,151 in interest.
    A 3.29% additional mortgage advance over 25 years would cost £4,683 in interest.

    Same with the credit card...I'll assume £2,000 and repayments at 3% of capital (£61/month) to be paid off in 4 years.

    A 19.9% credit card would cost £916 in interest over the 4 years.
    A 3.29% additional mortgage advance over 25 years would cost £937 in interest.

    Mortgages also tend to have more fees and charges every time you take an advance or change the term where loans and credit cards don't usually have fees and are much more flexible.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • As HappyMJ has pointed out, it doesn't work out well financially and will cost you more money in the long run especially with fees and and charges. I wouldn't recommend it to be honest.
  • elantanelantan Forumite
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    HappyMJ wrote: »
    At 50% LTV your strategy can work. It wouldn't work at 90% LTV.

    Technically though it doesn't save money. I'll assume a car loan of £10,000.

    A 7.95% personal loan over 5 years would cost £2,151 in interest.
    A 3.29% additional mortgage advance over 25 years would cost £4,683 in interest.

    Same with the credit card...I'll assume £2,000 and repayments at 3% of capital (£61/month) to be paid off in 4 years.

    A 19.9% credit card would cost £916 in interest over the 4 years.
    A 3.29% additional mortgage advance over 25 years would cost £937 in interest.

    Mortgages also tend to have more fees and charges every time you take an advance or change the term where loans and credit cards don't usually have fees and are much more flexible.

    Ahhh... I see you didn't notice the part where I said I paid the extra to the mortgage :)

    I still spent the same amount ( even more when I had spare) I just overpaid every month ... So instead of £600 paying bills with those two different % ( car loan and visa) I paid £600 ( and more if I had it spare) to the mortgage at 3.29%

    Saving me money and lots of time ... But you do have to be strict with yourself :)
    march 2011-july2019 8 years and 4 months ... or 100 months and counting
    "what would you do if you knew you couldn't fail.... enjoy the adventure" " to my own self be true"
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