What Car? Q&A - Is remortgaging better than a loan?

Q: I'm planning to release the equity in my house to pay for a new car. Is this a better idea than getting a personal loan?
Harry McLeish

A: First, make sure that new mortgage repayments are affordable. If so, then you need to do a quick calculation. Will the total you repay on the money you need be lower with a mortgage or a personal loan?

The APR on the mortgage will almost certainly be lower than with a personal loan, but you're highly likely to be paying the mortgage for far longer. That means you'll probably end up paying less, overall, with a personal loan unless you're coming to the end of your mortgage.

Each person's circumstances are different, so do your own sums before you decide. In general, though, while the additional monthly payments on your mortgage might be temptingly low, you'll pay far more in the end compared with a personal loan.