My first post...Should I get a loan to pay off the last 11k and be done with it?

Hello there all, this is my first ever post on here and I'd be glad of any thoughts you may have for my situation..

I guess I'm a mortgage veteran really....after first getting a mortgage in 2000 and have spent the last 23 years borrowing a bit more and paying it off steadily.
The thing is...I feel like a Grand National Runner who is facing the 30th fence...I want done with it,,I want to go to sleep at night knowing the house is ours because I've had enough of worrying about it....because at the minute and possibly in the future life might (only might) not be so straightforward.
So...the figures...there's nothing major here.

Total owed on mortgages is 11.5k as we speak. 3 of them finish next year and the 4th finishes 2028. The first 3 are all on SVR because my mortgage provider doesn't do any fixed rates on mortgages which are less than a 2 year term. The 4th one is about 3-4%. But I'm not really bothered about interest rates at this point understandably as the figures are so small. I've overpayed on just about everything I can afford for this year. Our monthly mortgage payment is approx £560.

My work ( 3 decades career so far...in my fifties) is going to change dramatically soon because it will have to due to my health (I can't work as hard at it as my younger colleagues and my health has suffered, plus I have elderly parents....workwise I'm going to have to downsize or do something else, with a very possible massive salary drop so I am thinking about outgoings...a few years off retirement.
So the mortgage.... I don't have any savings (other than emergency ones )that I could pay it off ..but the other day an idea came to me.
I could get a short term cheap loan (my credit score has always been good) for 11.5k over 5 years whilst I'm still in this particular employment...say payments of £200 a month...and pay the last of the mortgages off..so we'd be all done and dusted mortgage wise and nobody owns the house other than us.
It would also mean monthly outgoings would reduce in terms of money for 'housing' from £560 to £200. Now I know it would work out more expensive interest wise if you look at it over 5 years....but in the grand scheme of things it's no biggie pennies wise.
I just wondered...do people at this point get so close to the end and often finally say...right pay the lot off! in one fell swoop...I realise I'm in a good position (mind you it's taken a long time to get here)

So..leave it as it is?
Say sod it and pay it off and know it's yours?
I don't want to be 'renegotiating' mortgage deals with banks anymore...done enough of that
One more question....my Mrs said to me, "Yes but if we pay it off our credit rating will go down and we wouldn't be able to get another mortgage...we should try to keep a mortgage running in the background"   This to me seems logically a bit crazy...surely if you've shown you've paid a mortgage off that's good. Plus any future mortgages would be based on future income and assets wouldn't they?

If anybody has a nugget of wisdom to send my way I'll listen avidly. Thanks folks


Comments

  • EssexHebridean
    EssexHebridean Posts: 21,287 Forumite
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    edited 25 April 2023 at 4:40PM
    How does the loan interest rate compare with the mortgage interest rates it would be replacing? if it's cheaper, and you have your budget absolutely under control, then it could be a no brainer to reduce the interest you're paying simply in order to get the remaining amounts outstanding cleared quicker by repaying the same amount. 

    The really good news is that you can reassure your Mrs that your ""credit rating" is an entirely arbitrary thing - and that number you (or she) might be seeing isn't seen by anyone else - including any lenders. You can also tell her that in spite of not having had a mortgage for the past 7 years, myself and MrEH will shortly be applying for one and don't foresee any issues whatsoever - ion fact we already have an offer in principle in place. Allowing that it currently appears that you have multiple streams of secured debt, it might be that your credit file (the important bit) actually ends up improving for the lack of the mortgage. 

    Personally, in your shoes, and assuming there is no "spare" money available at the moment to make overpayments, I'd be paying as I am at the moment, then as the first mortgages finish, I'd transfer the money that was going to those to the later ones to get them gone sooner. So say you're paying £140 a month each to mortgages A, B, C and D, when mortgage A finishes, you start paying £280 a month to mortgage B, and £140 a month to C&D. When B finishes, you pay £420 a month to C, and £140 a month to D. And when C comes to a close, your full monthly amount of £560 goes to mortgage D if you're not locked into a fixed term, hopefully reducing it far faster. If you actually need to reduce your monthly outgoings due to the likely drop in income though that might not work. 


    🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
    Balance as at 01/09/23 = £115,000.00
    Balance as at 31/12/23 = £112,000.00
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  • South_coast
    South_coast Posts: 4,886 Forumite
    First Anniversary First Post Name Dropper Photogenic
    Have you thought about getting a 0% money transfer credit card(s) instead of a loan? There would be a flat rate fee of a few percent to pay, but the provider will then pay the cash into your account for you to do whatever you wish with it. If there is still a balance on the card at the end of the 0% period, just do a balance transfer onto another card. 

    I think the main thing that puts people off when they get to this to-hell-with-it-I'll-borrow-the-money-elsewhere point is how different types of borrowing would be treated if the SHTF income-wise. A mortgage provider would be likely to be understanding and work with you, a loan or credit card provider probably less so. 

    Good luck with your decision-making, and well done for getting this far 😀!
    Mortgage start: £65,495 (March 2016)
    Cleared 🧚‍♀️🧚‍♀️🧚‍♀️!!! In 5 years, 1 month and 29 days
    Total amount repaid: £72,307.03. £1.10 repaid for every £1.00 borrowed

    Finally earning interest instead of paying it!!!
  • How does the loan interest rate compare with the mortgage interest rates it would be replacing? if it's cheaper, and you have your budget absolutely under control, then it could be a no brainer to reduce the interest you're paying simply in order to get the remaining amounts outstanding cleared quicker by repaying the same amount. 

            


    Hiya, roughly 4.9% as compared to 6.99% Given the short terms and amounts involved the extra interest I'd get charged (over a longer term..say 5 years) is slightly more but nothing major.
    Thanks for your thoughts, I appreciate it. It's a good problem to have I know but it's taken 2 decades of constant worrying and work to get here and I just want it to disappear now!
    Thankyou 
  • Well...I did it. It was a  no brainer really. I am now, after 23 odd years Mortgage Free  Thank God for that!
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