Low LTV first time buyer. Is mortgage always best or can a loan be better?

janeskips2

Planning to buy a £250,000 flat as a first time buyer. I have £190,000 in savings so I need a mortgage or loan of £60,000. My salary is £70,000 so the shortfall is less than 1x salary. In this situation is there some other type of loan as a cheaper alternative to a mortgage? I'm in full time employment not self employed so this would not be a business loan and when I had a look around I found personal loans limited to about £20,000.

K_S

@janeskips2 As per the MSE page on personal loans https://www.moneysavingexpert.com/loans/cheap-personal-loans/ the cheapest rates for large (30k+) personal loans are around 7%+. And if I'm not wrong, most personal loan providers will not allow you to use the loan towards a property purchase.

If it's the extra mortgage related costs that you're worried about, there's no need to tbh.

You can avoid a broker fee by using a fee-free broker or going direct to the lender, most mainstream purchase mortgages come with a free valuation, with a loan size of 60k there'll almost certainly be no lender product fee. 

There will be a cost for conveyancing but you'll have to get a conveyancer anyway even if you're purchasing outright.

As an FTB, quite a few lenders will also offer cashback, which will go someway towards offsetting your conveyancing costs.

There might be tangential benefits of being a 'cash buyer' (using deposit plus personal loan in the bank) but setting that aside - for a loan size of 60k to purchase a home, a mortgage is likely to be cheaper and more straightforward compared to taking out one or more personal loans.

simon_or

I don't think one can get a personal loan over 50,000. Perhaps you could get two personal loans adding up to 60,000 but I'm pretty sure that would involve being creative with the truth (reason for loan) and an interest rate that is at least a few percent higher than a mortgage.

As KS hinted, if you're a savvy buyer that can use the cash buyer tag to wrangle a good discount (for example buying a flat with cladding issues) and know what you're doing, then the additional cost can be well worth it.