Mortgage versus loan to pay off mortgage

diggle

So we have mortgage coming to an end with HSBC . In April we owe £12, 200 roughly property value is £206, 900 . Currently we pay £346: 52 a month can’t really afford more than this per month . What would be our best option to pay this amount off in quickest possible time at £ 340 per month . Confused by mortgages in general ( not looking to pay another booking fee either .
Is there a better way to pay it off as in a cheap loan .
Longest time to pay off looking at 36 months or less .
Any advice gratefully received as we are in a dilemma as to whether to take HSBC 3 year fixed saver at 1.99 % no booking fee ?
Help 😕

getmore4less

In April we owe £12,200
...
What would be our best option to pay this amount off in quickest possible time at £ 340 per month
...
Longest time to pay off looking at 36 months or less

£12,200/36 = £339pm

You need something with an interest rate of 0.2125% or less.

The only way to get money that cheap is to borrow on a 0% spend credit card or a CC with £0 transfer fees.

HSBC 3y fix at 1.99% paying £340pm will leave you with £350 to pay after 3 years.

or to pay it off in 3 years £350pm

diggle

Thanks for quick response . I would like to get 0. % credit card but hubby not sure . Will have to browse cc I guess

getmore4less

Many CC have fees over 2% so you don't save anything and if you don't get the limit high enough you still need to find more money.

What is the 2 year rate?

ViolaLass

A 0% credit card for £12k is quite an ask!

Why not take the HSBC deal and pay the minimum over a longer period. Spare money could be saved at a higher rate elsewhere.

diggle

2 yr fixed standard with HSBC is 1.54% £999 fee
Or 2 yr fixed fee saver 1.85 £338.59 no fee
Overall cost comparison is 2.1% on 3 yr fixed or 2.2% on 2 yr fix .
But we would still owe after 2 yr fixed . ?

diggle

Thank you so much for advice I’m confused by it all

getmore4less

If this is confusing you do not get a credit card.

2 yr fixed fee saver 1.85%

in 2 years you will have this left to pay if you put in £340pm on the two deals(ignore the fee based ones)

£12,200 1.99% £340pm £4,377
£12,200 1.85% £340pm £4,353

Taking the 2 year you will have saved £25 over the 2 years.

What is you full term end date?

if you can find £350pm the 3y fix at 1.99% over 3 years full term gives you certainty that your payment won't change.


the interest paid over the 3 years will be £340 whatever you do you can't save more then that.

ViolaLass

diggle wrote: »

But we would still owe after 2 yr fixed . ?

Well yes, but you could get another one at that point.

chunkytfg

Can you even Remortgage for such a small amount? I thought Mortgages normally had minimum amounts they would lend?

Could you fix for a low rate for a 2 years and then at the end of those 2 year do a 0% CC deal for the remaining ~£4K? That would save a bit of interest plus allow to you pay it back as you want making over or underpayments depending on monthly spending.

diggle

Thank you everyone .
Grateful for all input
Opted for the 3 yr fixed .