what is the best way to utilize £8000 loan?

ahsanjalil

I borrowed £15K unsecured loan from my bank (NatWest) in March this year. I wanted to use it as deposit on the property. But unluckily I was ripped off by some dodgy mortgage broker. Now I left with 8K which I don’t want to spend anymore as I don’t have any requirements.

My question is what is the best way to utilize £8000?

1- Shall I pay £8000 back to bank and ask them to re calculate my remaining payments and APR?
2- Or contact another lender and borrow remaining £7000 and right off my full loan with NatWest, may be than I will get some tax rebate.
3- Or invest this £8000 somewhere.

I have got this on 6.9 APR with around £240 monthly repayment over 7 years period.

Many thanks in advance

Ahsan

CLAPTON

Assuming you wont want the money again in a short while then:

Q1... does your lender allow overpayments that pay off the capital and so reduce the overall interest charged. if yes then its probably best to simply pay it back.

Q2 ... well it depends upon what the APR would be of borrwing 7k and also the answer to Q1 above

Q3 unless you can invest at a net after tax return of more than 6.9% then not a good idea.

Rafter

Probably repay is going to be your best bet - your APR is fairly good given rates have risen.

I would just make an overpayment and then carry on paying the £240 a month on the balance of your loan to pay it off even quicker.

Not sure what you are on about with the tax rebate - can't see how a personal loan can be offset for tax or 'written off' as you say. If you were planning to buy an investment property you would only be able to offset your costs against the rental income. As you never bought the property there is no income therefore no tax payable or refundable.

R

ahsanjalil

Thanks guys, I think I'll be paying £8000 back and keep the repayment going on at £240 to finish it off quickly.

As long as I remember, they said that I have to pay 2 months interest as penalty when I pay back my full loan and they will give me some sort of tax rebate. But don't know what the penalty will be on partial amount (£8000).

CLAPTON

can only repeat what I said before... check whether paying 8k back will decrease the total interest payable..etc


and as rafter says... there is no tax rebate for early settlement

Rabiddog_2

I think ahjansil is referring to the early redemption Charge. Under the new rules the maximum charge that can be made is the outstanding capital plus two months interest. I think?

topbombing

if you have taken a fixed rate loan, then your not supposed to pay any lump sums in, as they have flexiloans to do that.. if you pay it back in now, all you will do is pay of a large proportion of the interest as its front loaded..youll reduce the term of your loan but will still be paying £240 a month too.

ahsanjalil

yes its fixed rate loan, it means no matter how much I pay them back they will still take full loan amount inlcuding interest payable in 7 years, which is £18300 something.

jay78

Aahsanjalil is right. I have a fixed rate loan with Natwest too. My understanding is that if you do make overpayments you will only reduce the term of the agreement (i.e. they time it takes you to pay it back) and not the interest charged.

lynzpower

iGNORE SOPHIA YOU HIDEOUS :spam: mer :wall:

CHR15

That'll be :spam: then.... is there no escape from these wasters??