increase mortgage to buy dream car?

[Cpb1702]

Anyone done this? Seems a cheap way in terms of monthlies to buy a £50k dream car!? Used R8 etc

Have it a year, sell it, pay back mortgage etc.

[Mave]

Have you run the sums through a mortgage calculator? Get the quote for your current, then current + 50k. Add on annual depreciation / 12. What do you get Pcm? And what are the fees? (and not trying to get into a political debate, but remember interest rates can go up as well as down - make sure you don't lose your house because of negative equity on a car...)

[Hitch]

In all likelihood you'd not repay the mortgage so you're swapping security for a dream. I've no problem with that personally if you can afford it.

[SteveSteveson]

Nice idea, but fees would probably eat it up, and I can't see the bank being happy with the idea.

[Chris1255]

Potentially one of the cheapest ways of borrowing. But as above only if you can definitely afford it, not worth losing your house over!

Take a fixed rate over say 5 years and there's no risk from rates rising. The hard bit for a lot of people would be to treat it in the same way as a personal loan and repay it over a short period. Let it run for 25 years and you could end up paying a fortune in interest.

Edited by Chris1255 on Tuesday 28th June 22:28

[EddieSteadyGo]

Cpb1702 said:

Anyone done this? Seems a cheap way in terms of monthlies to buy a £50k dream car!? Used R8 etc

Have it a year, sell it, pay back mortgage etc.

Lots have people have done this. Financing £50k on a mortgage will be much cheaper than on a personal loan.

If it costs you say 3% interest, that equates to only £1500 per annum. You would of course have the additional costs of depreciation and maintenance etc which might add £5000 - £8000 per annum, depending upon the car you buy.

Not crazy. Wouldn't do it myself, as I don't like borrowing to buy cars, but that it a personal thing rather than being advice.

[xRIEx]

Yep, I've done it several times. My mortgage is on a very low rate so I can borrow extra on the mortgage to put in a savings account and profit (in a small way) on the interest. Pay close attention to APRs, not flat rates. Do you have savings and is that AER higher or lower than your mortgage APR? If AER on your savings is lower than APR on your mortgage, use that up first. Would you be borrowing to the hilt? If you have an emergency and need to lay your hands on a few grand, do you have something to cover that? (Whether savings, or able to get credit on mortgage, loan or credit card.)

[Whitean3]

This is what I did to buy my first car- and was the only way I could have afforded it at the time. House prices had risen considerably (and my salary risen more moderately), so I could extend my mortgage by 20K, but a car, repay some debts, afford the new mortgage and know that my apartment was still worth a lot more than the mortgage loan.

I think it's a smart move to get you into your dream car as long as it doesn't put you into a negative equity situation. I'd still be cautious and make sure the sums add up though!

[Dave Hedgehog]

i looked at financing an RS like this when the mortgage rate was really low but loan rates where very high

the monthly's are very low but the fee's made the total cost a lot more expensive

[LittleEnus]

I always try and live within my means but appreciate I'm probably 1% of the UK population. Bangernomics is where I'm firmly at

[tankplanker]

Only worth doing if you over pay the mortgage to pay off the money borrowed to buy the car in a reasonable time frame, no more than 5 years. Otherwise you'll be paying off a lot more interest over 10 or 15 years and it'll be costing you almost as much as a traditional loan in interest with the loan over a shorter period.

I'm near the end of my mortgage but I'm still 15 year away from retiring, so I'll be switching to my mortgage as a means to fund car purchases. When I get to the final year of my mortgage and extending the term of the mortgage at the same time.

[ChasW]

My neighbour runs a local estate agency and is privy to what some people do with mortgages. He told me he knows of people that do this regularly sometimes for a new car and school fees! Having lived through two crashes since being a home owner it's not for me.

[mwstewart]

I have a golden rule that equity in my main residence is 'scared' i.e. I'll never touch it, but if you are thinking about it, I would advise you wait a few months whilst the country settles down and begins to work forward.

[MDMA .]

LittleEnus said:

I always try and live within my means but appreciate I'm probably 1% of the UK population. Bangernomics is where I'm firmly at

I'm with you in the 1% club ! always had a 10-15k pot to play with for cars. luckily, the ones I have had have never lost any of their original purchase price so apart from normal running costs, not cost anything else.

I can see the mortgage option being an easy way to finance a car out of normal means, but I doubt I would take that route.

as they say though, life is short so do what you want while you are here.

[giger]

mwstewart said:

I have a golden rule that equity in my main residence is 'scared'...

There is no reason to be scared. Sacred on the other hand...

[Maxus]

Raised this very thought with the wife on Sunday having watched the TG review of the RR Dawn (not serious). Response was no to the RR but yes to the M2.
Being on an offset mortgage at 1% over base it is a very cheap way to do it (no fees, just go online and switch money between accounts).
However, being boring I want to get the mortgage paid off rather than extended.

[mwstewart]

giger said:

mwstewart said:

I have a golden rule that equity in my main residence is 'scared'...

There is no reason to be scared. Sacred on the other hand...

Haha.

[giger]

Maxus said:

Raised this very thought with the wife on Sunday having watched the TG review of the RR Dawn (not serious). Response was no to the RR but yes to the M2.
Being on an offset mortgage at 1% over base it is a very cheap way to do it (no fees, just go online and switch money between accounts).
However, being boring I want to get the mortgage paid off rather than extended.

This sounds almost exactly like my situation. I have an M2 on order, but am overpaying on my offset mortgage. The end is in sight. I could either take PCP or extend the mortgage which should allow me to continue to overpay (whereas taking the PCP would prevent this) but mortgage will continue for a while longer. Mortgage rate is significantly lower than finance (BMW finance on an M2 is 6.9%!). My deliberation is if the M2 is special enough. It's not my dream car as per OP post.

Edited by giger on Thursday 30th June 08:16

[ex1]

Cpb1702 said:

Anyone done this? Seems a cheap way in terms of monthlies to buy a £50k dream car!? Used R8 etc

Have it a year, sell it, pay back mortgage etc.

A couple of years ago I was going to buy a 550 Ferrari for £40k to sit alongside my 3.2 911. I decided not to buy the 550 and sold the 911. I bought 2 buy-to-lets and thought I had made a wise choice for the future.

I have a nice income from the BTL's but the 2 cars have risen more than £150k which would have been tax free and I would have experienced a V12 Ferrari.

You can't second guess this stuff. Just do it.

[J4CKO]

If needs must as the car you have is knackered and you need transport, that is one thing but sticking 50 grand on it to buy a car that will most likely lose half of its value over three or four years, then pay for it over 20 odd seems a bit daft.

There is no right or wrong answer, every situation is different, but I wouldn't, we have no mortgage, I could borrow vast amounts of money against the house and buy pretty much any car you care to mention but would I risk my house for a bloody car, not a chance, cars are generally short term (compared to houses) ownership prospects that as a rule depreciate quickly, a mortgage is designed and intended for long term repayment of an appreciating asset.

I think the problem is, it would become a habit rather than a one off, prior to the 2008 crash people who had no real business buying X5's and the like got a taste for it on the back of easy to acquire cheap credit and using increasing equity, what is that 2007 X5 4.4 worth now, square root of fk all, and how much of the extra loan have they paid back.

There will be counter arguments, for example say you bought an appreciating classic five years ago, now that would be a smart move but most are really just a route to buying something more expensive than your day to day means.

I am not against loans and credit but I think personally I need to fund a good percentage of a car from cash or part ex, not from scratch on a long term loan.