We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
PLEASE READ BEFORE POSTING: Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.
The MSE Forum Team would like to wish you all a Merry Christmas. However, we know this time of year can be difficult for some. If you're struggling during the festive period, here's a list of organisations that might be able to help
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Has MSE helped you to save or reclaim money this year? Share your 2025 MoneySaving success stories!
Mortgage or personal loan - interest is the same!
klaw123
Posts: 6 Forumite
Due to a compensation pay-out I bought my first property (where I live) cash. The opportunity has arisen to purchase the upstairs flat, currently a popular airbnb. It is c.50k, would have a 15k deposit, and due to various features of the market (the area, my income, holiday let mortgages being a niche market) the mortgage rate is no better than a personal loan for the same amount (both c.6.9%) ofc, a personal loan needs paid off sooner, but we would be saving long term and is it not easier to re-loan than to re-mortgage? Am I just unduly scared of the word 'mortgage' ?
0
Comments
-
I would actually say the best and cheapest option would be to remortgage your mortgage free property with capital raising with a normal resi mortgage, which are low at the moment (sub 2% for most), to get the money to purchase the holiday let flat outright.
You can do as you please with it then with no lender interference and it is significantly cheaper than a personal loan.3 -
All personal loans I've seen explicitly prohibit being used for purchasing property.
It's annoying as i'd personally rather use a more expensive loan for that kind of money rather than a mortgage, which requires survey / searches / charge added to the property etc.0 -
Agree far better/cheaper to get a residential mortage on your home and use the money raised to buy the upstairs flat.
0 -
Thanks everyone - we looked in to releasing equity from the current property but that was not possible. Thanks for the tip that personal loans may prohibit buying property0
-
Why not possible?0
-
Unmortgageable for some reason?klaw123 said:Thanks everyone - we looked in to releasing equity from the current property but that was not possible.
0 -
So why would upstairs be mortgagable if your flat isn't?0
-
0
-
upstairs can have a holiday let mortgage as it would be based on the potential profit of the airbnb income. My current freelance status means i don't have 3 years of strong enough income for a mortgage on current property.0
-
If you haven't had a broker look at your holiday let mortgage, I recommend it. 6.9% for a holiday let mortgage is the highest I have ever seen.klaw123 said:upstairs can have a holiday let mortgage as it would be based on the potential profit of the airbnb income. My current freelance status means i don't have 3 years of strong enough income for a mortgage on current property.
1
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.9K Banking & Borrowing
- 253.9K Reduce Debt & Boost Income
- 454.7K Spending & Discounts
- 246K Work, Benefits & Business
- 602.1K Mortgages, Homes & Bills
- 177.8K Life & Family
- 259.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards