Bank loan to pay off mortgage?

Louisfrenchie

Hello All!
With all the worry about rising interest rates and mortgage deals being pulled, I am on a tracker deal 0.74% above base, and thinking on best course of action.
I have 4yrs left and approx £23k remaining on my mortgage.....wondering if a fixed rate loan (can get 3.3%) is way to go to pay off mortgage early and have certainty of the fixed payment.
Has anyone else used a bank loan to pay off remaining mortgage balance? Are there any downsides to this?
TIA

themoomins

If you can get 3% on the loan and commit to paying it all off within the time then I'd say it's a no-brainer. Will be in a similar situation in 2025 and looking at ways to get that last £20k paid off after the switch ends.  If a 3.3% personal loan was available I'd snap it up.

GAMBITv5

Just don’t tell anyone it’s to pay off your mortgage and you’ll be fine… new car did you say?

Louisfrenchie

Is it not allowed?

jimjames

Louisfrenchie said:

Is it not allowed?

Well I guess you're moving from secured to unsecured borrowing so the bank might not want that to happen. Check the T&Cs

GAMBITv5

Louisfrenchie said:

Is it not allowed?

I work for a high street bank. If you tell them it’s to pay off your mortgage you won’t be approved.

Louisfrenchie

Out of interest, why is that? Is it to do with secured/unsecured status?

GAMBITv5

More or less. 

themoomins

I never considered the unsecured aspect!  Okay, so say it's for home improvements.

BikingBud

jimjames said:

Louisfrenchie said:

Is it not allowed?

Well I guess you're moving from secured to unsecured borrowing so the bank might not want that to happen. Check the T&Cs

Why, if the borrowing is unsecured against a car or a house it is still unsecured.

Secured loan gets paid off, they are happy.

Unsecured does it matter, they had a risk when they extended the funds how has that risk changed?

tifo

Louisfrenchie said:

Out of interest, why is that? Is it to do with secured/unsecured status?

Any default and they'd secure it anyway by way of a Charging Order against your house.