should I secure my loan?

DrEskimo · 27 September 2018 at 1:51PM

Robert221 wrote: »

Thanks for all the helpful advice.
apologies, I wrote some figures incorrectly by mistake, I was looking at a wrong letter! Thanks for pointing that out.

The original unsecured loan was for 70,000, 10 years, £750 per month, 5 years to go, as I wrote.
The offer for secured loan is in deed around 40,000, 20 years from now, £210 per month.

The total repayment will be slightly higher when secured but as you see payment per month is significantly less. Of course this is all with the assumption that the APR for the secured loan will not go significantly higher in future and after the Brexit.

By the way, we may have misrepresented our boys. They actually are very happy and wise and do not put us under any pressure for money. This is simply our concerns as parents.

I can see that so far every one advises us to keep the loan unsecured. However please let us know if with the above correct figures you have a different view (I guess unlikely!).

Thanks again and sorry for the mistake.

Robert

You could borrow the £40k on the mortgage at the lower APR of 3% (5-yr fixed), then just overpay on the mortgage to pay the same amount as you do with the current mortgage and the personal loan.

e.g. Mortgage of £250,000 over 20-years @ 3% = £1,386.49 + personal loan of £40k @ 5% = £750. Total = £2,136.49 per month. After 5-yrs, mortgage outstanding = £200,772.21. Personal loan = £0.

Mortgage of £290,000 over 20-years @ 3% = £1,608.33. No personal loan. Overpay by £528.16 to = £2,136.49 as above. After 5-yrs outstanding mortgage = £198,751.82.

Saving of £2,020.39.

This won't change the situation with your outgoings, but will save you about £2k in interest by shifting the £40k debt to a APR of 3% as apposed to 5%.

That's if my maths are correct....

I guess it gives you the flexibility to overpay or not on certain months, which is both good and bad...!

Robert221 · 28 September 2018 at 2:10PM

Thanks DrEskimo!

I see what you mean. I will certainly think about it.

Grateful to all advice

Robert

should I secure my loan?

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