Loan or Mortgage ?

Aceshigh_2

Hi, after some advice.
My wife and I have a mortgage with the Nationwide BS at present. There are actually two separate payments per month making a total out-going of about £350. We owe approx £26,160 on the mortgage but was wondering for that amount would it make more sense to perhaps get a personal loan as these interest rates can be lower. We have about six and a half years left to pay, any thoughts ?

Aceshigh

[Deleted User]

Loan rates tend to be higher than mortgages, especially on that sum.

However, you may not be able to remortgage for such a low amount.

What is your current rate?

Aceshigh_2

Variable rate of 3.99%. I can get 3% from First Direct on a personal loan.

[Deleted User]

Aceshigh wrote: »

Variable rate of 3.99%. I can get 3% from First Direct on a personal loan.

Is that an offer you've had from them, or just something you've seen on their website?

You could get a mortgage rate of less than that, but again, only if you're able.

Shakin_Steve

If you got the loan at 3%, you would save yourself around £750. Are there any early repayment charges on your mortgage?

Aceshigh_2

The 3% was an offer from 1st direct as I have been with them for a long time and have had loans from them before, all paid up in full and on time.

sivs

I would personally see if you can get a remortgage. I am sure I have seen somewhere that you can get a mortgage of £25k.

Mortgage rates are low at the moment.

You will get better advise if you post on the mortgage section as this will be viewed by mortgage advisers.

Best of luck

[Deleted User]

There is 78 payments remaining on the mortgage at £350 per month which £27300 in total.
A personal loan of £26150 from First Direct's website at 3.3% over 78 months works out at monthly repayments of £372.84 with a total repayable of £29081.

I know what I would be doing.

System

Aceshigh wrote: »

Variable rate of 3.99%. I can get 3% from First Direct on a personal loan.

The cheapest mortgage rate is less than half that.

System

Aceshigh wrote: »

Hi, after some advice.
My wife and I have a mortgage with the Nationwide BS at present. There are actually two separate payments per month making a total out-going of about £350. We owe approx £26,160 on the mortgage but was wondering for that amount would it make more sense to perhaps get a personal loan as these interest rates can be lower. We have about six and a half years left to pay, any thoughts ?

Aceshigh

Remortgage with your current lender. Personal loans are going to be no cheaper than 3%, I'm paying 2.49% on a 5 year fix remortgage at 70% LTV so yours would be lower than that. Have you got any savings? If the interest rate on your savings is lower than the mortgage then you're better using the savings to repay the mortgage, ensuring you have an emergency fund. When you remortgage with the same lender you can use those to reduce the mortgage at the same time without penalty. I say the same lender because no mortgage company does mortgages below £25,000.

ReadingTim

See what rate you'd actually get on a loan if they give you a loan at all before making that decision - only 51% of successful applicants have to get the advertised rate, no matter how affordable they think their repayments are, how long they've banked with the proposed lender, how good their credit score is etc.

Don't forget also that although the purpose of the loan is to repay other borrowings, there's no guarantee for the lender that you'll actually do that, so your current borrowings will be taken into account when assessing further borrowings - your current plan is basically doubling your debt.