2nd Small Mortgage for Car Purchase

JimmyTheWig

dano17439 wrote: »

They do offer underpayments but I doubt I can draw back any overpayments in a lump sum, but of course until I talk to them I won't know.

Definitely worth asking, as this would be the cheapest way to do it.

Just had a look with my existing lender and yes they offer 1.59% which is higher than what i'm currently paying so my original thoughts still stand that if we are to do this, they'll probably insist we remortgage for the full new amount of 119k.

I'm not sure that they'll be able to do this. I think they'll either say you can have the additional borrowing or say they're not happy to lend that total amount to you on that house. Some people in the past have felt that mortgage companies have gone with this second option to get a borrower to move to a different mortgage company to stop them being on such a low interest rate with them.

Note that an additional loan on the mortgage won't necessarily be on the same terms as someone would get coming to the mortgage company as a new customer. As you'll be a trapped audience (we've already established that you can't go elsewhere for the money) then they may well charge higher rates.
My gut instinct is to go for a product with low (or, preferably, no) fees regardless of rate. Go for the shortest term you are allowed (5 years?). Use underpayments on your main loan to pay the additional borrowing off a quickly as you can.


[Well, actually, no. My gut instinct is to say don't borrow to buy a car unless you need to. Certainly don't borrow £25k to buy a second hand car. And if you are going to borrow to buy a car, don't do so against the security of your house. But I don't think you'll agree with me here!]

dano17439

And if you are going to borrow to buy a car, don't do so against the security
of your house

The sensible side of me knows this is the biggest risk as nobody has a crystal ball, but as said I don't fancy dealership finance rates

Cheers, tbh its all pie in the sky at the mo. I'm just exploring options of the cheapest way of raising some finance. Nothing is decided as yet, hence why I asked the question on this wonderful forum

Contemptuous

dano17439 wrote: »

Ok makes sense. having not been in this position before I didn't know it was near impossible to get 2 mortgages from 2 different lenders covering one property.

They do offer underpayments but I doubt I can draw back any overpayments in a lump sum, but of course until I talk to them I won't know.

Just had a look with my existing lender and yes they offer 1.59% which is higher than what i'm currently paying so my original thoughts still stand that if we are to do this, they'll probably insist we remortgage for the full new amount of 119k. Again until I talk to them...

I really don't want to get rid of my existing terms though, so maybe the Mrs will have to wait

Were you looking a remortgage rates with your existing lender? 1.59% is very low for additional borrowing.
Lenders typically only review your existing mortgage if you ask them to, so the chances are any new borrowing would not affect your current rate.

AnotherJoe

Buy the car on PCP.
Stop the mortgage overpayments.
Divert them to additional savings in high interest account (s) or if allowed additional payments off the loan.
Does that make it realistic to pay it off in three years or less?
If not you ought to have a much smaller lump sum to pay off at the end anyway.

Or, don't buy a car just yet, stop the mortgage overpayments and divert them to high interest savings, do the same for what you would have been paying for a new car as well, save for a year to 18 months and then you could get a smaller loan at a much better rate and buy the car then.

k3lvc

Your position is a good one to be in and the A45AMG a nice choice to have but don't get too hung up on the interest rates given the cost of depreciation etc.


Things I'd look at are


Is there any flex on the companies policy of V5C in her name ? Seems an odd one given the different ways people fund cars at the moment


If buying direct from Mercedes then haggle, haggle and haggle some more (unless the spec is key and you've found the car you want and don't want to lose it)


End of Q1 will be with us soon - potentially a chance to pick one up from a dealer who needs the business and has taken trade-ins from the new reg


Depending on mileage the offer of 2yrs servicing/warranty may be worth the difference between 10% dealer and 1.5% mortgage rate - ask and see what's on offer to swing the deal


Good luck (and can I have a blast when she's got it)

dano17439

Thanks @AnotherJoe and @k3lvc


We currently overpay or mortgage by £1200+ a month, so paying for a new car is not a problem, but for me 10% APR on a 25k finance deal is


Of course another option as rightly said is to save the over payments for 6-12 months then buy one with reduced finance. Totally nothing wrong with my wifes car at the moment but shes had it for nearly 4 years and getting itchy feet. Her boss has also quietly hinted that because its a 2008 model there maybe a possibility that the car allowance could stop if she doesn't get a newer car (company image to clients and all that), which of course we don't want to happen

Thrugelmir

dano17439 wrote: »

We currently overpay or mortgage by £1200+ a month, so paying for a new car is not a problem, but for me 10% APR on a 25k finance deal is

Little point in overpaying to borrow the money back.

Surprised you are worried by interest rates, When a car is a depreciating and wasting asset.

Debtslayer

Surely you won't have to borrow the full 25k to buy the car though? How much do you currently have in savings?
If you have say 10k in savings then I would get an unsecured loan for the other 15k; stop the overpayments on the mortgage and plough that money back into building up the savings while paying the loan.