buying out a loan?

Nuw

Hi Everyone,

Was wondering if one could 'buy out' a loan contracted previously by including it into a bigger one like a mortgage for a home?

The idea being that one gets a loan for say a car today and then apply for a mortgage a couple of years from now. Could one include what's left of the car loan into the amount borrowed for the mortgage?

Therefore having only one monthly repayment instead of two?

I'm not sure I'm clear but would appreciate your feedback on this

coylemj

I doubt if banks will do that nowadays but that carry-on was all the rage during the boom times and was actively encouraged as a quick fix by certain financial journalists, especially one who did a show on RTE TV. The plan was that you wrapped up the credit card bill or the loan for last year's holiday in the mortgage and pay for it over the next 20 years. The flaw in the plan is that typically the individual would then go out and borrow for another car or holiday or go mad spending on the credit card and would end up back where they started except now they had bigger mortgage repayments.

The rule that you should observe is that you pay for something within it's useful life i.e. pay off the car loan before it's a rusty wreck and pay off the loan for last year's holiday before you go on another holiday. Wrapping up what should be short term loans in a mortgage makes no sense. A house is a capital asset which appreciates over the long term whereas if you borrow to buy a car and then wrap it up into the mortgage, you will pay for that car many times over in interest and still be paying for it when it's a rusty wreck in a scrapyard.

Nuw

Hi Coylemj, makes sense, thanks!