Is it cheaper these days to just take out a new mortgage instead of a personal loan?

FIRSTTIMER

If I wanted some funds temporarily for 2-3 years, I would have usually just got a personal loan or maybe a 0% credit card (if I didn't want to touch savings). Having looked at cheap loans rates - my mortgage lender rates for 75% LTV are around 1.9/2%.

Surely just cheaper to take out a loan secured on house and pay off as and when?

getmore4less

Why not use the savings and top them up with the cashflow you would use to pay off the loan?

Borrowing money to save rare it is the smart option.

Cheapest money is interest free with no fees, purchase credit cards provide that option.

AnotherJoe

FIRSTTIMER wrote: »

If I wanted some funds temporarily for 2-3 years, I would have usually just got a personal loan or maybe a 0% credit card (if I didn't want to touch savings). Having looked at cheap loans rates - my mortgage lender rates for 75% LTV are around 1.9/2%.

Surely just cheaper to take out a loan secured on house and pay off as and when?

If you are going to make a habit of that get an offset mortgage. If you extend your mortgage there will be an arrangement fee. So, the headline interest rate might be 1.7% but if you have to pay(say) £1k arrangement fee on say a £5k extension to your mortgage the effective rate ratchets up into territory where you might as well have got an "ordinary" loan.


Plus, as said by another poster, if your savings will cover it, you probably arent getting better than 1.5% anyway so you can loan it to yourself from those far cheaper (and pay back from what woudl ahve been the loan repayments) and its tax free.

FIRSTTIMER

Is was really the idea around, surely its cheaper to do the following...

10k at a MTG rate of 1.99% over 5 years is cheaper than a 10k Lon at 2.8% over 5 years

Nebulous2

FIRSTTIMER wrote: »

Is was really the idea around, surely its cheaper to do the following...

10k at a MTG rate of 1.99% over 5 years is cheaper than a 10k Lon at 2.8% over 5 years

Then you have survey costs, solicitors costs, to add the security, redemption costs at the end, and many mortgage lenders have minimum mortgages of £25k.

Meanwhile your 10k loan at 2.8% will cost you £718 in interest over 5 years. A 1.9% one would cost £486. A £232 difference. Not worth the hassle in my view. Loan calculator here.

FIRSTTIMER

I mean for additional borrowing

Nebulous2

FIRSTTIMER wrote: »

I mean for additional borrowing

What additional charges would they add for that? Would you get it at the same rate as the rest of your mortgage?

If you're on a fixed rate for a specific period the new loan wouldn't coincide with that, making it more difficult to switch lenders as the two parts would end at different times.