Loan instead of mortgage

Jjjjjjjbarry

So instead of a mortgage where you pay back 2-3 times what you borrowed...

What if:
I have 10k in the Credit Union and want to buy a house for 50k.
Can I just 'borrow' 40k from the Credit Union and buy the house as opposed to getting a 'mortgage'?

Is there really a difference and does anyone ever do that sort of thing?
Surely would mean paying back a lot less with more flexibility on payments?

Thanks!

ted1

Jjjjjjjbarry wrote: »

So instead of a mortgage where you pay back 2-3 times what you borrowed...

What if:
I have 10k in the Credit Union and want to buy a house for 50k.
Can I just 'borrow' 40k from the Credit Union and buy the house as opposed to getting a 'mortgage'?

Is there really a difference and does anyone ever do that sort of thing?
Surely would mean paying back a lot less with more flexibility on payments?

Thanks!

You can do that but expect to pay 10% over 10 years. If you have a good income a personal loan of 40k makes good sense. It'd be the same as buying a decent car.

antoinolachtnai

Why would it mean you would pay back less?

the APR (interest rate) for the bank loan, secured on the property, is most likely going to be a lot lower than what the credit union will charge you (typically 9 percent or more, I think). This means that you will pay less with the bank mortgage.

A EUR 40k loan would be a very large loan for most credit unions. They are really set up for smaller, unsecured loans.

Generally, credit unions want to get their loans back over 5 years. This would mean that the repayments would be extremely high. Still, if you have income to pay it back, this might be a good idea.

It may well be that the bank would think a EUR 40k loan would be too small to be worth the paperwork in which case the credit union might make some sense (if your credit union were in a position to make such a loan).

The_Morrigan

I wouldn't think they would allow it.

The CU don't offer mortgages - the mortgage is a specific type of loan for property with specific legal rules.
The CU typically don't let people borrow money over longer terms, so you would be paying back the loan over five years instead of the lengthy mortgage terms (15-35).

ABajaninCork

The_Morrigan wrote: »

I wouldn't think they would allow it.

The CU don't offer mortgages - the mortgage is a specific type of loan for property with specific legal rules.
The CU typically don't let people borrow money over longer terms, so you would be paying back the loan over five years instead of the lengthy mortgage terms (15-35).

I thought the CU DO offer mortgages? Certainly, that's what I've seen in my local one. Or do they offer loans for certain types of property only??

In any case. For a relatively large sum of money, I'd imagine they'd want the property as security. So you'd still be paying a kind of mortgage, OP.

The_Morrigan

ABajaninCork wrote: »

I thought the CU DO offer mortgages? Certainly, that's what I've seen in my local one. Or do they offer loans for certain types of property only??

In any case. For a relatively large sum of money, I'd imagine they'd want the property as security. So you'd still be paying a kind of mortgage, OP.

I know the INTO CU did one in association with EBS (not sure if that is still offered), but it's an exception rather than the rule.

I've just had a quick look at their website and there is no mention of it as a product offering, whereas they do have car loans, personal loans & home improvement loans advertised.

heldel00

I know a lad, who knows a lad, who knows a girl who is a guard and she claims that she can borrow price of her house from Garda credit union for 10 years interest free. That's hardly correct is it? (I know it would probably be at a very low interest rate but not interest free surely?)

The_Morrigan

heldel00 wrote: »

I know a lad, who knows a lad, who knows a girl who is a guard and she claims that she can borrow price of her house from Garda credit union for 10 years interest free. That's hardly correct is it? (I know it would probably be at a very low interest rate but not interest free surely?)

It's not, some Garda credit unions offer a mortgage redemption loan so that you may pay off your mortgage with a bank. It isn't going to be interest free.

HeidiHeidi

Mortgage interest rate is always going to be lower than a bank loan rate.

Why not take out the mortgage over a very short term, or else over a normal term and wildly overpay your repayments, thus repaying it years in advance? That's how you'll save the most money.

antoinolachtnai

The_Morrigan wrote: »

I know the INTO CU did one in association with EBS (not sure if that is still offered), but it's an exception rather than the rule.

The EBS deal would have been a loan on the EBS loan book so it wouldn't really be a credit union loan. The credit union would have been acting as a tied broker.

The_Morrigan

antoinolachtnai wrote: »

The EBS deal would have been a loan on the EBS loan book so it wouldn't really be a credit union loan. The credit union would have been acting as a tied broker.

hence why I said it was in association with EBS.

st1979

Take normal mortgage. although this may be difficult as loan amount is so small. but if you can get a 15 or 20 year mortgage. then repay more than you are meant to. But if something unforseen happens you can drop to very low repayments and still not affect your loan conditions. as long as you get a variable rate mortgage

phormium

Credit Unions can and do give loans for house purchase, more often called a secured loan than a mortgage, same difference to a certain extent. Either way a 40k loan or mortgage or whatever you want to call it will cost the same if the interest rate and term are the same. Your line of thinking is if you take a smaller than normal amount over a shorter term that it will cost you less, that is right it will but equally if you got a 40k mortgage over the same term and same rate it would cost the very same. But usually mortgage rates are lower than loan rates so you would actually be better off with the mortgage not taking into account the legal fees. Some banks have a minimum mortgage amount and 40k might be too low for them to bother.

riclad

OR just get a mortgage for 40k,
if you want to you can pay it back as soon as you can,
Say the monthly charge is 450,
pay 1000, or more back on the loan,
You save money cos you reduce the total interest payments over the term of the loan.
Pay as much as you can afford while havingt a normal healthy lifestyle,
eg going out, going to a pub, going on a holiday.
OR borrow 10k from the credit union ,and get a 30k bank loan.
Set aside a few grand to buy furniture, legal fees etc

Taylor365

I remember a girl who worked in a barbers 1 day telling me herself and her fella were saving in the CU to afford a house.

She worked it out that if they save 50k in the CU they can borrow three items that and not have to pay for a mortgage.....








You should really educate yourself before making any big purchases.

riclad

Banks and building society,s give out home loans.
I would,nt go to a cu looking to borrow 150k for a house.
cu loans are usually for 3 or 4 years,
not 25 years.
NOT many people could pay back a 100k loan in 4 years,
if they are that well off .might as well get a bank loan.
i,m not saying you could not get a cu loan of 40k, if you had say 14k saved in the credit union.
And had been a cu member for a few years.