mortgage vs loan

tiger135

hi all
i am very close to buying out right. i have 185k in total  and am seeing houses/flats suitable for me for 200-250k.
had a quick look on nationwide loans and they can do 25k for 5 years at 7.1%. costing £500 a month.
this isnt much more than a mortgage which ive been quoted 6-6.5%.
is it worth considering this to avoid the whole long winded mortgage process?
i have no issue affording the shorter term loan payments as i am owed a fair bit by a friend.
thanks in advance.

MFWannabe

You’ve asked this question and it’s been answered before 
You cannot use a personal loan to purchase a property 
would that be the same friend you posted about that owes you money which you’ll probably never get back? 

tiger135

how will they know? if your buying outright do you still have to provide bank statements?

Jonboy1889

Instead of getting a loan can you not just get a mortgage over 5 years? Or even a longer mortgage but overpay/pay off early when you can- What’s the need for a loan?

tiger135

mainly due to the long winded process of getting a mortgage  compared with a loan i can get within hours/days
plus the time saved with the transaction of buying the house outright 

MultiFuelBurner

So although this has been covered before and you seem keen to open a new thread on a variation on a theme here goes.

Yes if you get a loan and are a cash buyer there will be some checks as to where the money ahs come from for money laundering purposes but this loan won't be something that sets off a red flag.

It also side steps any need for mortgage valuations and fees from the financial lender for the mortgage product.

amnblog

MFWannabe said:

You’ve asked this question and it’s been answered before 
You cannot use a personal loan to purchase a property 
would that be the same friend you posted about that owes you money which you’ll probably never get back? 

An issue potentially if also getting a mortgage (as the mortgage company may object) but not in this case.

amnblog

If you are borrowing £25,000 at a rate 1% higher over 5 years it will cost you around £700 to £800 more in interest over the five years. By the time you pay the legal costs and probable mortgage exit fee it will most likely be close to cost neutral.

tiger135

amnblog, but wont i save overall due to the loan being paid in 5 years instead of 25 years of interest (albeit slightly lower rate) on the mortgage?

jimjames

tiger135 said:

amnblog, but wont i save overall due to the loan being paid in 5 years instead of 25 years of interest (albeit slightly lower rate) on the mortgage?

But you'd pay the mortgage in 5 years too. There is no rule that says a mortgage has to be 25 years. If the rate is lower for mortgage you'll still pay less

tiger135

so it is possible then , as an alternative to a small mortgage ie <50k