Using a mortgage to buy a car

Hello,

I have heard of people using a mortgage to buy cars. Is that legal? Can it be done?

When you mortgage a property, you are offering the property as collateral against a loan. For this reason, the loan should only be used to pay for the property being mortgaged.

Some borrowers do use money received from a home loan to finance cars or other purchases because interest rates are generally lower than those of personal loans. This practice is generally not contractually acceptable and can lead to problems.

When you spend money obtained through a mortgage (towards a renovation, for example) on something other than your property, you are not increasing the value of the property. This could cause your collateral (your home) to decrease in value.

Alternatives:

A reverse mortgage allows home owners to exchange equity in their home for money. In this process, you mortgage your home or increase your current mortgage without losing the title deed. The lender pays out either a lump sum or regular installments for your equity, while you pay interest on the mortgage.

It is also worth noting that homeowners can often get lower interest rates for personal loans. You can find these offers by selecting the "Yes" field corresponding to the question "Are you a homeowner?" in the moneyland.ch personal loans comparison.

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Interactive mortgage comparison
Interactive personal loans comparison
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