Remortgage and Car Purchase - 2 birds 1 stone?

scribbleuk

Folks,
Just wanted your thoughts/opinions/experiences on the following scenario.
In the next couple of months my fixed mortgage is due to expire and I'm shortly going to start the process of remortgaging to another deal rather than pay the SVR. Around the same time I'm due to change my company car. I've more or less decided to opt out of the company car scheme and take the car allowance instead, mainly due to a lack of vehicles that meet our family requirements.

I had intended to take a personal finance plan or personal contract hire, as I like changing the car every 3 years or so, plus didn't really want to own it. However it still means paying out good money each month, and even with the option to own at the end it would be unlikely I would take this, and simply start another agreement. So in a permanent rental situation with no asset at the end, if you can call a car an asset! It would also mean carefully timing the application for the mortgate and car finance so as not to clash with each other.

Then the thought occured about extending the mortgage amount to buy the vehicle outright. First thought is this would be madness to borrow the money over 20 years rather than 3-5. However, closer inspection revealed this might not be such a bad idea. The extra cost would be approx £150 per month on the mortgage. The car allowance from the company would be around £250 after tax, therefore covering the difference and also slightly overpaying the mortgage. Great if I stay with the company and keep the car for 20 years! However when you also consider the personal contribution I make of £250 per month for the current company car would be put into over paying the mortgage, it would significantly reduce the term of the mortgage. If I wanted to change the car in a few years, I could draw back this overpayment to use as deposit on a new vehicle along with the trade-in value of the existing vehicle.

Another benefit, over and above the low monthy cost, and the fact I can further overpay the mortgage, is that the payments would be covered to an extent if I was unable to work due to redundancy or illnes. A PCP or PCH plan wouldn't cover this wihout additional insurance.


The main benefits I see are:
Payments protected in event of illness or redundancy.
Ability to overpay mortgage.
Ability to draw back overpayments for future deposit if required.
Ownership of the car.
Ability to buy a 2nd hand car, thereby not suffering huge depreciation. Using PCP or PCH on 2nd hand cars isn't very practical.
Small monthly payments, essentially free in my current job.
If jobs change, the monthly mortgage payment isn't significantly different from my current expenses.
Single loan/monthly payment.


Drawbacks:
Borrowing against house in theory increasing risk of repossesion if things go badly wrong.
Reduces amount of money that would be available to borrow if we wanted to move/upgrade house.


I'd be interested in hearing thoughts on this solution or if anyone has taken this approach and how it worked out for you.
Cheers.