# borrowing from Credit Union to pay mortgage...



## lubo (13 Jun 2010)

i'm in a bit of a dilemma here. i have a loan that i'm about to pay off with the credit union. i have some money in there in savings, and although i'll be glad to see the back of the payments i am currently making (€150+ per week), i'm wondering if another loan would be more beneficial.


do i borrow from the Credit Union again, €15,000 i was thinking  and if they would, and just pay the lot of it towards the mortgage.  therefore bringing the overall mortgage down in price and get me out of  this negative equity sooner.
don't i borrow from the Credit Union, and the extra money i will  have every week i put it in to the mortgage account, and at the end of the month pay the extra to the principal of the mortgage.
my car is in tatters just now and i need it for work. do i borrow still €15,000, put €10,000 to the mortgage and €5,000 to a newer car. i know it won't be long til i'm forking out on a new car anyway, and i'd rather get one before it's too late and the banger i have dies on me leaving me with nothing. i'd like to get a car that will last the next 3-4 years if possible.
i could ask them if i could reduce the payments from €150+p/w to €50, therefore not making them such a burden as they currently are.

my mortgage is in negative equity.
my mortgage payments will be reducing in september, but will rise again when interest rates do.
i really want to pay as much off the mortgage as possible within the next 3-4 years and am looking for any advice that can assist me with this.


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## SarahMc (14 Jun 2010)

My advice is none of the above. Shop around for the highest interest rate savings account, and put the 150e a week in that.  This will put you in the enviable position of having substantial savings put by to do with as you wish, pay a lump sum on your mortgage or pay cash for car.

Alternatively, you could use the savings in the CU to pay for the car, and start building your savings back up there if you wish to keep your savings in the CU, although they may not be paying as much interest as you are paying on your mortgage.


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## SCT (14 Jun 2010)

SarahMc said:


> My advice is none of the above


+1

Save the €150 + whatever else you've been saving (if you have) until you need a car and pay cash for it. If you shop around you'll find a decent runner for 4 or 5k.

You didn't state whether you were thinking of selling. Negative equity shouldn't matter too much to you if you don't plan on selling in the near future. It sucks but it shouldn't matter


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## SCT (14 Jun 2010)

lubo said:


> i'm wondering if another loan would be more beneficial.


 
Just adding that extra debt is never beneficial


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## Brendan Burgess (14 Jun 2010)

Hi Lubo 

Which of the following would you prefer?

A:
House value: €200k
Mortgage:€215k

B:
House value:€200k
Mortgage:€200k
Credit Union loan:€15k

The true rate of interest on the Credit Union loan could be as high as 16%. So don't borrow from the Credit Union to pay off a mortgage which should be around 3%. 


You can up your repayments on a variable rate mortgage at any time.


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## lubo (3 Aug 2010)

Thanks for the feedback, I knew coming on here i would hear what I didn't want to hear, but at same time it's why i asked on here because I'm just too reckless with my money and needed some solid advice. 
Time has passed and I never went for the loan (although I queried it and was told they'd give me the money no problem). 
The CU will be cleared in Nov and I have just over €3000 in it.
The Mortgage is coming to the end of a 3 year fixed term and I'm in the enviable position of going onto a tracker rate at 1.25% in October, which will bring me savings of €350 per month(until rates start going up again). So after years of struggling I'm a little more hopeful now, provided the job doesn't go hahaha.
the reason for the post is;


  i'm looking for savings options. do i have to put the same set amount in each week/month or can it be any amount to my liking at the time.
can i pay extra to my tracker mortgage, ie, payments will be €760 per month, can i pay €850 with the extra €90 going to the overall mortgage amount/principal?

Thanks again for the advice, i only ask because I know i'd take the easy option given half a chance


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