Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • edallen41
    • By edallen41 11th Aug 18, 10:22 AM
    • 10Posts
    • 3Thanks
    edallen41
    Money for car - loan or mortgage
    • #1
    • 11th Aug 18, 10:22 AM
    Money for car - loan or mortgage 11th Aug 18 at 10:22 AM
    Hi,

    Just hoping for a bit of advice on best option for purchasing a new car.

    We are in the process of remortgaging at the moment and are about to submit an application. This is for 265k on a house valued at 500k (for personal reasons, this is not actually redeeming a current mortgage - repaying loan to mother in law who kindly helped us over the last year while we got settled with new jobs. She technically has a charge on the property which will be removed). This will be on a 5 year fix at 1.89%.

    We also need a new car, for which we need 15k. We will be buying rather than PCP, lease or hire/purchase as we do not mind it being relatively recent used model and although we may change after 3-4 years, we feel we'd like the option to keep at that point and it seems much more cost-effective to have invested in ownership.

    Our options are take out a 15k bank loan after the remortgage (looks like we could get around 3.3%). Or we could add 15k to the mortgage - if we did the latter, clearly this would raise our monthly payment, but we would endeavour to overpay as well, so that at the end of this fix period, we have paid off all of the additional 15k.

    I'm just wondering what your thoughts are? Most articles on adding to mortgage for the purpose of a car do not factor in that we would overpay. Also, we're in the lucky position that it would have no impact on LTV on the mortgage. We do not have any concerns over being able to keep up with payments. We are remortgaging anyway, it just so happens to be a good time to change car also. Our broker has said there would be no problem in borrowing this additional 15k and this would still be the best mortgage option if we did so.

    Would appreciate opinions.

    Many thanks!
Page 1
    • zx81
    • By zx81 11th Aug 18, 10:26 AM
    • 18,067 Posts
    • 19,286 Thanks
    zx81
    • #2
    • 11th Aug 18, 10:26 AM
    • #2
    • 11th Aug 18, 10:26 AM
    Can you pay at least part of it from savings? How much are you currently saving per month? You could quickly rebuild savings from the amount you are saving on the loan.

    Re a loan - have you tried an eligibility checker to see what kind of rate you may get?
    • redux
    • By redux 11th Aug 18, 11:52 AM
    • 18,390 Posts
    • 24,445 Thanks
    redux
    • #3
    • 11th Aug 18, 11:52 AM
    • #3
    • 11th Aug 18, 11:52 AM
    It's not quite loan advice, but I'd rather spend less on a car.

    For 5000 vs 15000, you'd see first year depreciation of about 100 vs 300 a month.

    The difference of interest on these between 1.9 and 3.3% is much smaller than that
    • DCFC79
    • By DCFC79 11th Aug 18, 1:16 PM
    • 32,318 Posts
    • 20,328 Thanks
    DCFC79
    • #4
    • 11th Aug 18, 1:16 PM
    • #4
    • 11th Aug 18, 1:16 PM
    It's not quite loan advice, but I'd rather spend less on a car.

    For 5000 vs 15000, you'd see first year depreciation of about 100 vs 300 a month.

    The difference of interest on these between 1.9 and 3.3% is much smaller than that
    Originally posted by redux
    Here here, loads of cars available for 5k and if you buy right you can get something decent.
    • foxy-stoat
    • By foxy-stoat 13th Aug 18, 9:03 AM
    • 2,440 Posts
    • 1,352 Thanks
    foxy-stoat
    • #5
    • 13th Aug 18, 9:03 AM
    • #5
    • 13th Aug 18, 9:03 AM
    I would 100% not be using credit to buy a car and paying it over 10/15/20/25 years whatever the percentage rate.

    Get a 3 year loan MAXIMUM for the car if you mush spend 15K on one, that way when you come to sell it you will not be in a position that your still paying for something that you dont have.
    • macman
    • By macman 13th Aug 18, 3:08 PM
    • 42,277 Posts
    • 17,678 Thanks
    macman
    • #6
    • 13th Aug 18, 3:08 PM
    • #6
    • 13th Aug 18, 3:08 PM
    Unless you are intending to pay off your mortgage within the 3/4 year ownership of the car, then you are missing the main flaw in your thinking: you will be paying interest on that 15K for years after you no longer own the car. It may well be cheaper than a loan or PCP per month, but not if you look at the total cost of the loan over x years, which is the only figure that matters.
    No free lunch, and no free laptop
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

1,775Posts Today

6,651Users online

Martin's Twitter
  • Ta ta... for now. This August, as I try and do every few yrs, I'm lucky enough to be taking a sabbatical. No work,? https://t.co/Xx4R3eLhFG

  • RT @lethalbrignull: @MartinSLewis I've been sitting here for a good while trying to decide my answer to this, feeling grateful for living i?

  • Early days but currently it's exactly 50 50 in liberality v democracy, with younger people more liberal, older more? https://t.co/YwJr4izuIj

  • Follow Martin