Using house equity to finance car purchase
Discussion
Always said I would never do this but I’m really tempted to treat myself to a second hand Boxster or similar. Perhaps I’m having a mid life crisis!
I only have £2500 left on the mortgage and my current deal is a lifetime tracker at 0.19% above BOE base rate so currently 0.69%. House is worth around £200K. 20 years left on a 25 year mortgage.
I have other investments including shares, a fund managed stocks and shares ISA’s, and a second rental property but don’t really want to touch these.
The car would cost around £14-15k. I could put down £5K as a deposit and finance the balance through the mortgage. The aim would be to pay off the loan in 3 years through over-payments on the mortgage. I can do this without incurring a penalty from my lender.
My reasons for considering this are.
1. Low LTV on house.
2. Mortgage interest rate (currently 0.69%) is much lower than normal personal loan rates available.
3. Sufficient equity in car so sell and settle loan if required.
Your thoughts?
I only have £2500 left on the mortgage and my current deal is a lifetime tracker at 0.19% above BOE base rate so currently 0.69%. House is worth around £200K. 20 years left on a 25 year mortgage.
I have other investments including shares, a fund managed stocks and shares ISA’s, and a second rental property but don’t really want to touch these.
The car would cost around £14-15k. I could put down £5K as a deposit and finance the balance through the mortgage. The aim would be to pay off the loan in 3 years through over-payments on the mortgage. I can do this without incurring a penalty from my lender.
My reasons for considering this are.
1. Low LTV on house.
2. Mortgage interest rate (currently 0.69%) is much lower than normal personal loan rates available.
3. Sufficient equity in car so sell and settle loan if required.
Your thoughts?
Guessing your lender, do oyu have a mortgage reserve account, whereby you can simply wrte a cheque for the money you need?
It will be charged at 4.99% if its who I think it is, and you can pay it off at anytime (so knock it back with overpayments or when you sell the car)
Oh yeah, you need to consider that you are securing debt agianst your property, if you don't pay the debt you lose your house, standard industry warning that you appear to have considere, but I have to include it.
It will be charged at 4.99% if its who I think it is, and you can pay it off at anytime (so knock it back with overpayments or when you sell the car)
Oh yeah, you need to consider that you are securing debt agianst your property, if you don't pay the debt you lose your house, standard industry warning that you appear to have considere, but I have to include it.
So you have a mortgage with 20 years term left to go and you only owe £2,500 (with a lifetime rate of 0.19% over base).
If your lender will advance you further funds on the same terms then that is some cheap borrowing
I would be surprised if they would, unless you have somesort of revolving/redraw facility.
If they will allow you to avail of the above deal then I doubt you could source cheaper finance for a 2nd hand car purchase, so I would say go for it.
If your lender will advance you further funds on the same terms then that is some cheap borrowing
I would be surprised if they would, unless you have somesort of revolving/redraw facility.
If they will allow you to avail of the above deal then I doubt you could source cheaper finance for a 2nd hand car purchase, so I would say go for it.
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