Should you repay the rest of your mortgage with a personal loan?

Answered on 16 February 2019

I have a mortgage of £30,000 and I have £15,000 in savings. I'm thinking of borrowing £15,000 (personal loan) and paying off my mortgage now, this would be a 5 year loan. I reckon I would pay less interest than if I kept my mortgage for the 5 years, or is there something better you could suggest?

Personal loan to pay off mortgage

As John Charcol is a mortgage expert, personal loans do not come into our field of expertise. However, we can offer recommendations distinct to the mortgage in question.

As the interest rate on a mortgage is significantly lower than those applied to personal loans, the better way may be to find out what a £15,000 personal would cost you over 5 years, and if it's affordable to you, then pay down half the mortgage with your savings, and set the payments on the remaining balance to the same level as you would pay on the personal loan. You should find that you'll be able to pay the £15,000 off even quicker than 5 years.

Ask The Mortgage Experts answers are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them. We recommend you seek professional advice with regard to any of these topics where appropriate.