Borrow Now or Later??????

L

loadsamoney

Guest
Hi Folks,

I need some finacial advice. I'm 45, no mortgage, married, sole earner with 3 kids.

I have loans amounting to about €20K, I pay back about €800 a month and will wipe out all the loans around Sept 2006. I need to change my car and do some house improvements, I was thinking of remortgageing to the tune of €50K, my new monthly repayments would be about €400 for the next 10 years.
Am I mad to take on another mortgage or should I see it a easy money?
 
If you are borrowing, it seems a shame to waste the opportunity to borrow more. See if you can get €100k and put the remaining amount into an investment property.

With the increase in house prices you could have the whole lot (including the car loan) paid off within 5 years.

As you say - it's easy money - don't waste the opportunity.
 
> If you are borrowing, it seems a shame to waste the opportunity to borrow more.

I would not agree with this at all. Only borrow if you need to and then only the amount that you need. Borrowing for the sake of it (e.g. because you can, because interest rates are low, because you may benefit from tax relief on certain loans etc.) does not really make sense since it ultimately represents a cost to you. Work out how much you really need now and borrow that if you can't finance the expenses yourself. If you need to borrow more later then sort it out then.
 
Only borrow if you need to and then only the amount that you need.
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This I would agree to, as "life advice" to my kids... but at 45 you are clearly not a kid.

If you are servicing a €20K loan(s), at whatever the prevailing rate, and sitting on a property worth enough to allow you raise a second mortgage (at 3~3.25%), then this is a "no-brainer". If — and this is a big "if" — you are 99% sure of being able to pay off the revised monthly payment and cover all emergency "contingencies" that might arise — then it makes no sense for you to do anything but re-mortgage (preferably on a tracker rate).

But if you consolidate your loans onto a topped-up mortgage and then default on a payment, your home is on the line. So weigh it up... (and for God's sake don't rely solely on advice you get from your current bank/ your potential lender (or their broker) / on internet bulletin boards...

(No disrespect..! ;) )

Dr. M.
 
Paying for a car which you will probably own for 3-5 years over a 10 year loan is madness. You should plan to repay over the period of time that you'll be using it.

Or here's a mad idea that I've surprised some people with recently - Don't borrow to buy a car. Save up in advance and pay for it in cash instead.
 
Save up in advance and pay for it in cash instead.
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Still the best advice in the book...

All I'm saying is, if you've got big debts (€20K?) and are sitting on a pile of equity, leverage the latter to pay off the former...

But only "if", etc.
 
I just did a quick calculation on the ICS website - if you were to do a 40,000 loan over 5 years at fixed rate it would cost you €763 per month. Theres no reason you can't avail of the lower mortgage rate in a 5 year time frame! If you were to go with variable or tracker it would be well under 750 a month.

20k over 5 years would be €390 approx on the Fixed rate - by the way ICS don't give the best rates - I just used them as an example.

You could get the 10 year time frame out of the equation and still save some money for yourself (cost yourself less money - for the more prudent minded amongst you!)
 
Borrow Now

I did what u r now suggesting about 2 yrs ago and I'm delighted, my repayments were nearly halved. My savings in the credit union were also relased as I had no large loan there. Now I'm putting 2 thro' Uni and still have a life.
 
Borrow Now

> I did what u r now suggesting about 2 yrs ago and I'm delighted,

What who suggested?

> my repayments were nearly halved

Notwithstanding the fact that your repayments are lower are you sure that the long term total interest and related costs of your borrowings are not significantly higher as a result?
 
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