Refinancing my mortgage with a personal loan

dano17439

Hi folks


I am a hardcore mortgage free wannabee, check out my thread on the MFW board here....


https://forums.moneysavingexpert.com/discussion/5089063/can-i-join-your-club


We are rapidly approaching owing a NET balance of 25K. I am thinking of refinancing our mortgage with a personal loan. It sounds crazy doesn't it, but i've crunched the numbers and its seems to work out, unless i've missed something drastic, hence why i've posted here, for you good people to check over


I think the main reason of the refinance idea is to change a secured debt into unsecured debt. Of course the refinance would only be valid if I could secure 2.9% on the loan. FWIW I secured 25K 3.5 years ago on the lowest rate available back then (albeit 3.4%) to buy a car so i'd be more than hopeful of the same again


Ok so here are the numbers. We are aiming to be mortgage free in 11 months time. We have no exit charges on the mortgage


£577 Interest charge on existing mortgage for the next 11 months


£132 (approx.) interest on savings over the next 11 months, meaning a NET interest charge of £445 incurred (£577-£132)


£389 interest on a 25K loan over 12 months at 2.9%


Saving of £56 due to refinancing (£445-£389)


Also to consider the monthly payment of the loan is £2,116 per month. Our current situation is that we save £1,750 per month, plus the £765 mortgage contracted monthly payment, meaning we would also save £399 on the monthly commitment, which I could use as an over payment to the loan, hence saving more interest, or increase pension contributions etc


Am I missing something? Of course as stated it would be dependant on securing the very best rate for the loan


Thank you

jonesMUFCforever

Banks generally will not lend to buy property on an unsecured basis.

BoGoF

What rate is the mortgage?

Socajam

Dumbest thing I have read today, what will tonight bring?

BoGoF

The more I read the post the more confused I'm getting. Why not just overpay by your monthly savings each month? Have you calculated the mortgage interest on that basis?

foxy-stoat

Sorry what, you want to take out a £25,000 loan to save £56?

Yes this sounds like a terrible idea, doubt you will get a £25,000 loan at the lowest rate for this purpose anyway.

sourcrates

BoGoF wrote: »

The more I read the post the more confused I'm getting. Why not just overpay by your monthly savings each month? Have you calculated the mortgage interest on that basis?

Exactly this, you don’t need a loan, just overpay the mortgage by the value of the loan repayment every month, your attempting to complicate what’s is actually a simple matter.