Using a personal loan to overpay my mortgage!

Sam3007

Hi all,
I have got a 2 year fixed mortgage which expires in Jan 2023.
House value 280000
Balance 206000
i will not be able to remortgage to another lender.

i was offered a personal loan of 15k at a rate of %3.4 for five year from another bank.

Am I right in thinking that taking this loan and making a lump sum or monthly payments to my mortgage will be beneficia for me becuse mortgwge rates will probably hit 4 to 6% by the end of 2023.

Does Halifax allow customers to overpay using a personal loan?


thanks

housebuyer143

Yes, you can do this and worth it if the rate is lower. Problem being though the term is short and you might find it makes your payments higher than it just being in the mortgage as a mortgage is spread over maybe 25 years.
If you can afford them both at the same time, it's a no brainer. Tell them it's home improvement though...

Sam3007

housebuyer143 said:

Yes, you can do this and worth it if the rate is lower. Problem being though the term is short and you might find it makes your payments higher than it just being in the mortgage as a mortgage is spread over maybe 25 years.
If you can afford them both at the same time, it's a no brainer. Tell them it's home improvement though...

I have just noticed that I have put down the wrong date (Jan 2023) .. in fact , my fixed rate mortgage ends in 1 Jan 2024. 

GAMBITv5

Seems a silly idea to me.

Your mortgage terms will be over a much longer term, the UPL over 5 years, attracting a much higher relative payment at a great rate than what you’re paying now.

why not just overpay your mortgage?

GAMBITv5

*greater rate

MFWannabe

What is your current interest rate on your mortgage? 

Sam3007

GAMBITv5 said:

Seems a silly idea to me.

Your mortgage terms will be over a much longer term, the UPL over 5 years, attracting a much higher relative payment at a great rate than what you’re paying now.

why not just overpay your mortgage?

I thought to myself that If I remortgage with Halifax end of 2023 at 4 or 5%, I will be paying much more interest on the 15K (instead of %3.4) . Have I got it wrong ?

Monthly payment for the UPL will be £271. Do you think I will be better off just overpaying £271 per month (£ 2439 in 9 month , just before Halifax sends me the new remortgage offer)

Sam3007

MFWannabe said:

What is your current interest rate on your mortgage? 

% 2.06 which ends in 1 January 2024 

K_S

Sam3007 said:

Hi all,
I have got a 2 year fixed mortgage which expires in Jan 2023.
House value 280000
Balance 206000
i will not be able to remortgage to another lender.

i was offered a personal loan of 15k at a rate of %3.4 for five year from another bank.

Am I right in thinking that taking this loan and making a lump sum or monthly payments to my mortgage will be beneficia for me becuse mortgwge rates will probably hit 4 to 6% by the end of 2023.

Does Halifax allow customers to overpay using a personal loan?

thanks

@sam3007 As long as the source of funds used for overpaying the mortgage is legal, Halifax is unlikely to care where it comes from.

GAMBITv5

Sam3007 said:

GAMBITv5 said:

Seems a silly idea to me.

Your mortgage terms will be over a much longer term, the UPL over 5 years, attracting a much higher relative payment at a great rate than what you’re paying now.

why not just overpay your mortgage?

I thought to myself that If I remortgage with Halifax end of 2023 at 4 or 5%, I will be paying much more interest on the 15K (instead of %3.4) . Have I got it wrong ?

Monthly payment for the UPL will be £271. Do you think I will be better off just overpaying £271 per month (£ 2439 in 9 month , just before Halifax sends me the new remortgage offer)

Yea, as your mortgage is on a lower rate than the UPL. It will reduce your LTV and proportionately reduce your new payments before you’re term expiry.

MFWannabe

Sam3007 said:

MFWannabe said:

What is your current interest rate on your mortgage? 

% 2.06 which ends in 1 January 2024 

Sam3007 said:

MFWannabe said:

What is your current interest rate on your mortgage? 

% 2.06 which ends in 1 January 2024 

Then just overpay from now until then; overpay as much as you can so you’ll reduce the amount you owe and get into better ltv by the the time your fix ends