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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' ?
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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.
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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
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Why not possible?0
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Unmortgageable for some reason?klaw123 said:Thanks everyone - we looked in to releasing equity from the current property but that was not possible.
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So why would upstairs be mortgagable if your flat isn't?0
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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
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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.
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