alternatives to re-mortgage ?

tellme_why

Hello all,
My two-year fixed mortgage is coming to an end; the outstanding balance is about 15 grand.
I am looking for alternatives to finance the outstanding balance and planning to pay it back in a year.
I have considered the following solutions:
-Remortgage: this is very expensive as I cannot get any mortgage with cheap arrangement fees (>1 grand)
-Personal loan: not familiar with this, not sure what collateral is required to access these products
-Any alternative? For example is there any bank offering about 15 grand overdraft for a year (reducing monthly by 1.5 grand or similar)..

Many thanks!

[Deleted User]

Any arrangement fee for a mortgage can be added to the amount borrowed
For an unsecured loan of 15k you would need an income of 30k (assuming no other debt)
A bank is extremely unlikely to offer an o/d anywhere near 15k

JJG

Whats the SVR that your mortgage will revert to? For the sake of a year that might be the easiest option.

AnotherJoe

What JJG said, the SVR you revert to is likely to be as good or better than a personal loan and even if it wasn't quite as good, if you are paying it off that quickly the extra cost wont be huge.

No reason you can't try for a personal loan though, as said depends on your salary and outgoings.

Sasahara

If you are able to pay off the remaining £15K in equal monthly payments in 12 months. The SVR is likely to be the cheapest option if you can't avoid arrangement fees. For every 1% more you pay using the SVR over your current rate would cost you £81. So if the SVR was 3% more, that's roughly £243 more interest.

tellme_why

Thank you; my SVR is 5% which is twice the amount of the best personal loan I could find with a quick search. The monthly payments of a personal loan would roughly be the same of my current mortgage payments so I guess a lender should get confidence I can afford payments as I did for the mortgage.
Anyone experienced in getting a personal loan this big? How did it work?

Many thanks!

tellme_why

..Thinking of the SVR option, how the accounting would work?
Let's say my mortgage balance is 40k at period end. Can I pay the mortgage company a lump sum (accumulated savings) of 25k at the period end and then pay the reminder 15k monthly @ SVR in a year?

Sasahara

Once you pay the 25K and are down to 15k you can ask for how much is left to settle the mortgage. This should be slightly less than 15K as paying the 25K off will have removed the interest cost for that amount over what ever remaining official period was left on the mortgage. (I assume that is longer than the 1 year you intend to pay it off in)

But my figure of around £81 extra interest per % over your current rate is reasonably accurate if you do pay off the remaining in 12 equal payments over a year. I'd be very surprised if you could get a loan that could match it as any loan with a low rate would almost certainly require a longer term than 1 year, probably 4+ for the lender to make decent money.

Without all the facts it's hard to give better figures. We really need to know you current rate and how long the mortgage has to go if you just paid the normal monthly repayment.

TheShape

tellme_why wrote: »

The monthly payments of a personal loan would roughly be the same of my current mortgage payments so I guess a lender should get confidence I can afford payments as I did for the mortgage.

A lender would need to be confident that you can pay double what you're paying on your mortgage because at the point they give you the loan you will have doubled your debt and be committed to paying both the mortgage repayments and the loan repayments.

Dird

Sainsbury's loan for under 3%...guessing SVR will be higher than that
http://www.moneysavingexpert.com/loans/cheap-personal-loans#75k15k

Sasahara

Dird wrote: »

Sainsbury's loan for under 3%...guessing SVR will be higher than that
http://www.moneysavingexpert.com/loans/cheap-personal-loans#75k15k

To be repaid in 2-3 years, so you need to almost double the rate for a comparison to paying the SVR for 1 year at twice the payment speed, if you were lucky to get a 2 year deal.