Clear mortgage with a loan?

NorthEastBoy

I have around £16k left on my mortgage with the Halifax which will be paid off in 18 months.  I'm on a tracker rate, currently 7.99% but rising each time the MPC ups the base rate.  Having had a quick look, I can get a loan of that value for around 5.5% over the same period so, in theory, it would be cheaper to get a loan to pay off the balance (think it would save around £60/month at the current rate).  Is that a too obvious a thing to do or am I not considering any pitfalls?  I can't see the rate reducing in the time I've got left to pay and due to the small(ish) debt and short time left I don't think there would be any deals open to me but haven't spoken to the Halifax about it yet. Any thoughts?

gazfocus

Personally, if a loan is cheaper than the mortgage rate you're on, as long as there's no early repayment penalty, I'd probably get the loan and pay off the mortgage. Any money saved is a good thing in the current climate.

lojo1000

NorthEastBoy said:

I have around £16k left on my mortgage with the Halifax which will be paid off in 18 months.  I'm on a tracker rate, currently 7.99% but rising each time the MPC ups the base rate.  Having had a quick look, I can get a loan of that value for around 5.5% over the same period so, in theory, it would be cheaper to get a loan to pay off the balance (think it would save around £60/month at the current rate).  Is that a too obvious a thing to do or am I not considering any pitfalls?  I can't see the rate reducing in the time I've got left to pay and due to the small(ish) debt and short time left I don't think there would be any deals open to me but haven't spoken to the Halifax about it yet. Any thoughts?

No brainer since presumably you're not putting your house up as security in the personal loan. I'm sure Halifax will be delighted.

themanfromportobello

ah the delights of only having 316k left to pay on your mortgage. :-)

No brainer to me, subject to factoring in ERCs, get the loan.

themanfromportobello

themanfromportobello said:

ah the delights of only having 316k left to pay on your mortgage. :-)

No brainer to me, subject to factoring in ERCs, get the loan.

Sorry £16k!!! NOT 316k! lol

Ryan_Holden

Don't count your chickens on getting 5.5% unless you have been absolutely, fully pre-approved. Every other rate is just representative.