2nd Small Mortgage for Car Purchase

dano17439

Hi

We want to buy my wife a new car. Historically i've always bought cars cash outright, or financed via personal loan, which I always settle early to save interest. She currently owns her car outright, and I lease mine. She cannot lease a car, as she receives a car allowance from work, and one of the conditions is that she has to have the V5C in her name.

However the car she wants means that to buy it, PCP is the only option as we haven't enough in savings to buy it outright, and the value of the car means personal loan rates are not very favourable. However i'm not a fan of paying say 36 instalments, then still owing a massive chunk of money at the end, and i'm definitely not a fan of car dealership interest rates at circa 10%

So i've come to the conclusion getting a second small mortgage paying 1.5% interest is the best way to go. We could get the mortgage over 5 years

We are heavily overpaying our current main mortgage, and earn a good income between us. Apart from obviously getting another secured debt, are there any other negatives in doing this?, and secondly, will a new car purchase be valid reason for the bank to agree the mortgage?

Thanks

csgohan4

Try car broker like drivethedeal.com or carwow for example. Makes the price for a new car closer to a second hand car.

Shop around, Toyota had 0% interest a few months ago.

10yearfix

What car do you want to buy?

dano17439

csgohan4 wrote: »

Try car broker like drivethedeal.com or carwow for example. Makes the price for a new car closer to a second hand car.

Shop around, Toyota had 0% interest a few months ago.

Thanks for the advice, i've already tried Carwow, but the car she wants is out of our reach brand new, regardless of the above websites and 0% finance

Sorry I should have been more specific on the "new" bit. New for her, not brand new

JimmyTheWig

How much are you looking to borrow?

dano17439

How much are you looking to borrow?

25k (ish)

What car do you want to buy?

Mercedes A45 AMG (my Mrs is a petrolhead )

saverbuyer

dano17439 wrote: »

25k (ish)



Mercedes A45 AMG (my Mrs is a petrolhead )

I drive the A200 AMG but I'm changing.


You're obviously not going new at 25k for the A45. 25k is a lot of money for a second had car added to the mortgage.

dano17439

saverbuyer wrote: »

I drive the A200 AMG but I'm changing.


You're obviously not going new at 25k for the A45. 25k is a lot of money for a second had car added to the mortgage.

Agreed, but I feel we have the resources to service this debt, and taking into account the value of my wifes current car we would be borrowing about 75% of the value.

The ones we are looking at are around 18 months old which have done between 10-20k on the clock, so pretty much still fresh out the box, but with a big chunk of depreciation taken out of them. If we were to buy brand new, with the spec we want it would be 45k, which we don't want to commit to

saverbuyer

dano17439 wrote: »

Agreed, but I feel we have the resources to service this debt, and taking into account the value of my wifes current car we would be borrowing about 75% of the value.

The ones we are looking at are around 18 months old which have done between 10-20k on the clock, so pretty much still fresh out the box, but with a big chunk of depreciation taken out of them. If we were to buy brand new, with the spec we want it would be 45k, which we don't want to commit to

If it's anything like the A200 AMG, I wouldn't bother. I'm changing at the minute. The car is a bit meh.

foxy-stoat

Can you not apply for a unsecured loan of £25,000?

Have you been offered a drawdown of equity of £25,000 by your current lender for the purpose of buying a secondhand car over 5 years at the rate of 1.5%, plus any fees?

dano17439

If it's anything like the A200 AMG, I wouldn't bother. I'm changing at the
minute. The car is a bit meh.

The A45 is a little different than the A200

Can you not apply for a unsecured loan of £25,000?

Probably, but then the interest rate is 6%+ anything above 15k

Have you been offered a drawdown of equity of £25,000 by your current lender for
the purpose of buying a secondhand car over 5 years at the rate of 1.5%, plus
any fees?

I haven't but i'm currently on such a good deal with my existing main mortgage that I would be extremely surprised if any additional borrowing will be at the same rate. They'll probably want me to re-finance the whole amount which I wouldn't want to do