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Bets way to loan final £30 to be mortgage free

edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
7 replies 1K views
PaulinusPaulinus Forumite
6 Posts
edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
Dear Brainiacs

I now have been taking advice from MSE for 9 years now and have been overpaying my mortgage by double. So have done really well. 25 year mortgage nearly paid off in 10 years..ish. I am now beginning the next phase and need some help please..
Times change and my partner and I are now selling the house and starting a LAT relationship (Living apart together) in nearby cities. So we are selling up and splitting the money from the house. Thats the story... so here is my question...

I estimate I will get around £90K as my split from the house.
However to buy a decent apartment in my city will cost £120-125K so I have a £30K shortfall.
I should have an excellent credit rating as I have no other debt and have been a goody two shoes with my mortgage.

Ideally I want to be a cash buyer and thus mortgage free and can definitely afford to pay back within 3 .. or even 2.5 years from my salary (I have already been paying £1350/month as part of my mortgage overpayments for 7 years)

Q. how could/should I raise a loan for £30K?

I mentioned this to one bank on the phone and the guy immediately said I cannot use a loan for a house purchase... is this a law of some kind?

Sainsburys look good but will still cost about £3.5K for a 3 year £30K loan

Can I take 2 x £15K lor 1 x £30K loan out?

What do I say I need the money for when they ask?
(
I could always buy a £30K car!)

How do I go about this exactly & what is the best way to manage this?

Many thanks in advance. P.

Replies

  • HappyMJHappyMJ Forumite
    21.1K Posts
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    Paulinus wrote: »
    Dear Brainiacs

    I now have been taking advice from MSE for 9 years now and have been overpaying my mortgage by double. So have done really well. 25 year mortgage nearly paid off in 10 years..ish. I am now beginning the next phase and need some help please..
    Times change and my partner and I are now selling the house and starting a LAT relationship (Living apart together) in nearby cities. So we are selling up and splitting the money from the house. Thats the story... so here is my question...

    I estimate I will get around £90K as my split from the house.
    However to buy a decent apartment in my city will cost £120-125K so I have a £30K shortfall.
    I should have an excellent credit rating as I have no other debt and have been a goody two shoes with my mortgage.

    Ideally I want to be a cash buyer and thus mortgage free and can definitely afford to pay back within 3 .. or even 2.5 years from my salary (I have already been paying £1350/month as part of my mortgage overpayments for 7 years)

    Q. how could/should I raise a loan for £30K?

    I mentioned this to one bank on the phone and the guy immediately said I cannot use a loan for a house purchase... is this a law of some kind?

    Sainsburys look good but will still cost about £3.5K for a 3 year £30K loan

    Can I take 2 x £15K lor 1 x £30K loan out?

    What do I say I need the money for when they ask?
    (
    I could always buy a £30K car!)

    How do I go about this exactly & what is the best way to manage this?

    Many thanks in advance. P.
    How about a mortgage for 60-75% of the purchase price and with the excess money you put that into a variety of high interest current accounts earning more interest (at least 3% at most 6% free of any risk...add a bit of risk and you can get 7% with peer to peer lending) than you are paying out on the mortgage (at most 2%). That's what I do....it's free money so why not. The interest you earn will cover the mortgage payments over a 30 year period and you own a home without ever actually making a mortgage payment from your salary.

    A £30,000 personal loan with Sainsburys would have a 6.7% interest rate.

    You can take two £15,000 loans with different providers if they will approve the loans. You would need a high salary for this to work.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • PaulinusPaulinus Forumite
    6 Posts
    Thanks Happy MJ
    I am 53 and want to pay off any mortgage asap. so quick is good even if it costs £1-2K II want to be free and clear. I could do £30K in about 3 years or less. (I earn around 38K gross/ year

    Question is what do I say my two £15K loans are for?
    I get the impression that if you say you want to pay for property that the lenders will not allow that?
    Is this true?
    P
  • dark^knightdark^knight Forumite
    506 Posts
    Part of the Furniture 100 Posts Photogenic
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    Hi,

    Whether you take a mortgage or a loan...it's still a debt.

    Why not just take a mortgage on a low rate fix for 2/3 years...and pay it off within 3 years?
  • HappyMJHappyMJ Forumite
    21.1K Posts
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    Paulinus wrote: »
    Thanks Happy MJ
    I am 53 and want to pay off any mortgage asap. so quick is good even if it costs £1-2K II want to be free and clear. I could do £30K in about 3 years or less. (I earn around 38K gross/ year

    Question is what do I say my two £15K loans are for?
    I get the impression that if you say you want to pay for property that the lenders will not allow that?
    Is this true?
    P

    That is true. You would have to say you are using the loan to buy a house which would not be allowed. To say anything else would be considered fraud by false representation.

    There's ways around it. You could accrue a large debt on a credit card by putting all of your expenses on it whilst saving every penny of your income then get a loan to refinance the credit card debt the reason for the loan would be to refinance your debt.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • LuckyinlifeLuckyinlife Forumite
    1.6K Posts
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    This is pritty simple

    Get a mortgage youll have a rate of under 2% pay it off in full once your fixed term is up simples

    Or look around for a cheaper property for 100k a bit out of where you want

    Being mortgage free is great for a lot of us it will free up over 30-50% off our income if you can comfortable afford a small 30k mortgage dont worry so much :]

    Good luck
    Mortgage--- [STRIKE]£67700 March 15[/STRIKE] [STRIKE]£65221 April 15[/STRIKE] [STRIKE]£64983 July 15[/STRIKE] [STRIKE]£64780 sept 15[/STRIKE] Remortgage [STRIKE]£67295 oct 15[/STRIKE] [STRIKE]£66599 Nov 15[/STRIKE] [STRIKE]£65878.73 Dec 15[/STRIKE][STRIKE] £64834 1st Jan 16[/STRIKE] [STRIKE]Feb 16 £64,511.89[/STRIKE][STRIKE] March 16 £64,056.40[/STRIKE] [STRIKE]April 16 £62550[/STRIKE] [STRIKE]May 16 £62,396.20[/STRIKE] Feb 17 £60.800
    Emergency fund 23k
  • AnotherJoeAnotherJoe Forumite
    19.6K Posts
    10,000 Posts Fifth Anniversary Name Dropper Photogenic
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    I think you have let an obsession with not having a mortgage blind you to the fact that a mortgage is just a loan that happens to be for a house. So it makes no sense at all to take out a loan at a high interest rate just to avoid having a loan (aka mortgage) at a much lower interest rate.

    Just take out a small mortage that can either be overpaid without penalty, or take out a small mortgage, save up in parallel in high interest rate accounts and pay it all off at the end of the 2 or 3 year fixed mortgage period.
  • Thanks all, really appreciate the wise range of advice

    So, Yes ... I am coming around to the fact that if I get a short mortgage it might just be a lot simpler.
    ( I kind of wanted to offer cash to give me a little more leverage when buying my flat, but ultimately it hardly seems worth it)
    Thanks for the loan `fraud` warning that answered my Q clearly. I really don`t want to get in trouble!

    So where i am at now is this:
    First Direct do a lifetime tracker at 1.99% = APR 2.5% .
    NO set up fee

    I CAN overpay
    & NO early redemption charges.
    I calculate the risk will be minimal even if interest rates rise to say 5% I can cope.
    OK I will probably pay £1-2K to borrow the £30K, but it means that I will pay about £1,300/month (which is £60 less than what I pay in overpayments right now!)..... and that is for only TWO YEARS! :D

    Sounds like job done (as long as I dont get the sack!)

    If anyone spots that I am I missing anything, please let me know?
    Thank you all again
    P
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