Forum Home » Mortgages & Endowments

5yr fixd vs personal loan to pay off

New Post Advanced Search

Coronavirus: The latest from MSE


The MSE team is working extremely hard to keep the info we have about your travel rights, cancellation rights, sick pay (and more) up to date.
The official MSE guides: UPDATED MSE Coronavirus Guides

NEWSFLASH


New, free ‘Academoney’ course from MSE and the Open University launches
All the key areas of personal finance are covered, so that you can master your money decisions


5yr fixd vs personal loan to pay off

edited 30 November -1 at 1:00AM in Mortgages & Endowments
5 replies 884 views
Sparky001Sparky001 Forumite
1 posts
edited 30 November -1 at 1:00AM in Mortgages & Endowments
With a few places still.offering 3% personal.loans and only having 5yrs to go with £25k left, I'm wondering what disadvantages there would be justt doing a 25k personal loan and paying off the mortgage.
Monthly payment difference is about a couple.of quid maybe a fiver more for a personal loan but then its unsecured not against the home. With the term and amount left there is very little interest to pay so 1/2 % between a mortgage and personal.loan isn't mich over 5 years (less that a cheap trip.to the off licence per month)
Reading up I'm trying to find out if there are any gotchas in this.
Any devlis advicate advice would be appreciated :)

Replies

  • madvickermadvicker Forumite
    156 posts
    First Anniversary
    To be honest, if you can get a similar rate of interest to a fix - it would actually be worth doing. For the simple reason that you would be transferring a secured debt to unsecured debt - and the house would then be fully yours.
  • middleclassbutpoormiddleclassbutpoor Forumite
    764 posts
    500 Posts Second Anniversary Name Dropper Photogenic
    ✭✭✭
    Check the 3% rates are those being offered on the amount - i.e. that these rates are not restricted to amounts under £25k

    Also consider that when you apply that may not be the rate they offer.
  • sammyjammysammyjammy Forumite
    5K posts
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    ✭✭✭✭
    Sure it would change the lending from secured to unsecured but unless your planning on defaulting I don't see the benefit in this for such a shot term particularly if its not cheaper?

    What do you see as the actual benefit other than "feeling better about the lending"?
    "You've been reading SOS when it's just your clock reading 5:05 "
  • getmore4lessgetmore4less Forumite
    39.1K posts
    Part of the Furniture 10,000 Posts I've helped Parliament
    ✭✭✭✭✭
    Why not also look for 0% money on spending credit cards.

    With the right cash flow you can save interest.
  • I looking at the same thing carry one with the mortgage 35k or get a personal loan. The loan saves me 900 quid over 48 months. But is fixed where as I can drop the mortgage payments down as I over pay.
Sign In or Register to comment.

Quick links

Essential Money | Who & Where are you? | Work & Benefits | Household and travel | Shopping & Freebies | About MSE | The MoneySavers Arms | Covid-19 & Coronavirus Support