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Putting 8K loan on top of Mortgage? Bad Idea?

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  • 11-11-2011 9:08am
    #1
    ronan45
    Registered Users Posts: 1,584 ✭✭✭


    Hi all, anyone got an opinion on the following.

    I am currently re-structuring my mortgage. Missed some payments, so the bank is "Capitalising the arrears over the remaining term of the mortgage"
    Is it prudent to put an 8K loan on top of the mortgage also to ease my monthly repayments. Its difficult to pay back each month and was part of the reason I ran into mortgage trouble juggling the 2 of them. The original amount of this personal loan was 38K so bulk of it is re-payed already.

    The interest on this loan is about 23% (will end up costing about 12,500 over 5 years)
    I am meeting a financial advisor next week, but i was looking for your thoughts also if any one fancied to put their thoughts forward :)
    The bank may not want to even do this in any event


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    #2
    unclebill98
    Registered Users Posts: 3,816 ✭✭✭unclebill98


    Why?

    Pay interest of 23% compared to your mortgage interest rate of surely much less than 10%!!

    How is this going to save you on monthly payments?


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    #3
    chris85
    Registered Users Posts: 4,502 ✭✭✭chris85


    ronan45 wrote: »
    Hi all, anyone got an opinion on the following.

    I am currently re-structuring my mortgage. Missed some payments, so the bank is "Capitalising the arrears over the remaining term of the mortgage"
    Is it prudent to put an 8K loan on top of the mortgage also to ease my monthly repayments. Its difficult to pay back each month and was part of the reason I ran into mortgage trouble juggling the 2 of them. The original amount of this personal loan was 38K so bulk of it is re-payed already.

    The interest on this loan is about 23% (will end up costing about 12,500 over 5 years)
    I am meeting a financial advisor next week, but i was looking for your thoughts also if any one fancied to put their thoughts forward :)
    The bank may not want to even do this in any event

    If you are struggling with payments and are in arrears i cant see the bank wishing to take on further debt from you with the sole intention of it to be used to fund your repayments. Definitely not good practice.

    Also do you have equity available in the loan to get a top up? Are you in negative equity basically?


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    #4
    ronan45
    Registered Users Posts: 1,584 ✭✭✭ronan45


    chris85 wrote: »
    If you are struggling with payments and are in arrears i cant see the bank wishing to take on further debt from you with the sole intention of it to be used to fund your repayments. Definitely not good practice.

    Also do you have equity available in the loan to get a top up? Are you in negative equity basically?

    Ah equity wise i would say im at equilibrium. Mortgage is exactly what place is worth now. Well the Personal Loan is with my mortgage bank. So I will owe them the same amount in either way you look at it no?:confused:
    They are not taking on extra debt as both debts are with them. Sorry I should have said in original post (key info that i guess):o


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    #5
    professore
    Closed Accounts Posts: 5,857 ✭✭✭professore


    I think In your situation it's a good idea. You owe the money anyway, and if you get into real trouble you won't be able to meet your mortgage repayments anyway so that's a non issue. Therefore lowering your monthly outgoings would make sense.


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    #6
    subway
    Closed Accounts Posts: 6,131 ✭✭✭subway


    without any real figures its hard to say
    for example, 8k over 20 years at 7% is going to cost you 62eu a month
    and equates to interest of around 7000 which is more than the 4500 you will pay over 3 years at 23%. however, inflation will eat that figure down (assuming we get any) so 7000, over 20 years will bring the real figure more inline with the 4500 figure.

    if it were me, and the bank would allow it, i would do it using the above figures.
    adjust your figures and see what numbers come out.


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    #7
    ronan45
    Registered Users Posts: 1,584 ✭✭✭ronan45


    Thanks All for your Input. Its much appreciated :)

    Ill see what they say and I will report back, So this thread might be of use to someone in this situation also:)


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    #8
    chris85
    Registered Users Posts: 4,502 ✭✭✭chris85


    professore wrote: »
    I think In your situation it's a good idea. You owe the money anyway, and if you get into real trouble you won't be able to meet your mortgage repayments anyway so that's a non issue. Therefore lowering your monthly outgoings would make sense.

    Since the equity is around neutral no way the bank would consider giving a top up on the mortgage which would end up with higher balance than the property is worth. The underwriters would never allow it. It increases their risk.


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