Top up loans on a mortgage

J

johnp06

Guest
Hi all,
Can someone please explain to me why it is a bad thing to take a top up loan (say at 3.1% on an average tracker) on your mortgage for a car or holiday or whatever. For arguments sake say u top up by 10k for a new car. Pay it back over five years at 3.1% instead of the usual 8/9% for a normal "car loan".

Is this a bad thing to be doing?
 
No its a good thing as long as you DO repay it over the short term. The problem is that its easy to be tempted to pay it over the same term as the mortgage, in which case its no longer good.
 
ok so only if u let the repayments slide over the term of the mortgage its a bad thing?...presumably because u end up paying more interest?
 
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