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  • FIRST POST
    • pablo86
    • By pablo86 9th Jul 17, 9:18 AM
    • 6Posts
    • 2Thanks
    pablo86
    Over pay mortgage or pay off Unsecured Loans first?
    • #1
    • 9th Jul 17, 9:18 AM
    Over pay mortgage or pay off Unsecured Loans first? 9th Jul 17 at 9:18 AM
    Hi

    We've been in our first property now around 4 years, looking to start a family soon so likely going to need a bigger boat!

    Starting to think ahead to getting a mortgage and our credit record.

    We are in fairly good shape, no bad credits, no missed payments, etc, good availability to credit, make use of a credit card regularly that is paid in full almost every month for a number of years now. So all good on the credit record front.

    We have 2 unsecured personal loans, again in good shape, no missed payments, etc.
    These have around another 18 months remaining before fully paid up.

    Our mortgage LTV currently sits at under 65%.
    The sort of property I think we would look to move to would bump this up-to around 75% with our current equity, so around a 25% deposit.

    My question therefore is would we be better over paying on our mortgage to get a better LTV and deposit or should we concentrate on getting the loans paid off first to increase our credit availability or a bit of both...?

    I would personally like to pay off the loans to reduce our (committed) monthly outgoings and then look to use that cash on over paying the mortgage each month. But obviously looking to take the best advice on which would assist us most in attaining a mortgage for a bigger property.

    Many Thanks in advance,

    Paul
Page 1
    • getmore4less
    • By getmore4less 9th Jul 17, 9:47 AM
    • 30,846 Posts
    • 18,449 Thanks
    getmore4less
    • #2
    • 9th Jul 17, 9:47 AM
    • #2
    • 9th Jul 17, 9:47 AM
    lack of detail.

    What rates are the debts.

    What does affordability look like now and with the bigger mortgage?
    Income/debts/outgoings
    • Debtslayer
    • By Debtslayer 9th Jul 17, 11:40 AM
    • 435 Posts
    • 616 Thanks
    Debtslayer
    • #3
    • 9th Jul 17, 11:40 AM
    • #3
    • 9th Jul 17, 11:40 AM
    I would speak to a good mortgage broker ideally to get a better idea.
    If it were me I would pay off the unsecured loans to reduce monthly outgoings and also the amount you owe on loans can have quite an impact on how much you can borrow. A mortgage broker will be able to advise how the loans will affect the amount you can borrow
    Current Mortgage 01.10.17 £113,513.88
    MFW Start Mortgage: £114,794.64
    Current MED: 2036 Target MED: 2026
    Overpayment Target for remainder of 2017: £2,000
    Mortgage overpayment savings: £684.80
    MFW No 124
    • pablo86
    • By pablo86 9th Jul 17, 11:44 AM
    • 6 Posts
    • 2 Thanks
    pablo86
    • #4
    • 9th Jul 17, 11:44 AM
    • #4
    • 9th Jul 17, 11:44 AM
    hi, thanks for the responses.

    @getmore4less
    The loan rates are 3% at around 10k of debt. Repayments per month are around £600.
    Current mortgage is around £500 per month.

    I would guess that a bigger mortgage would be around £2/300 per month more.

    In terms of affordability we where offered a mortgage of this scope 4 years ago on lessor incomes and with a smaller deposit, granted things have changed with mortgages in recent years but I would think that the affordability checks should come out favourable for us.

    @Debtslayer,
    Thanks, this is my line of thinking and is what my gut is telling me to do. Great advice though regarding checking with a broker. Cheers.
    • Thrugelmir
    • By Thrugelmir 9th Jul 17, 11:50 AM
    • 56,257 Posts
    • 49,625 Thanks
    Thrugelmir
    • #5
    • 9th Jul 17, 11:50 AM
    • #5
    • 9th Jul 17, 11:50 AM
    What rate of interest are you currently paying on the mortgage?
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • pablo86
    • By pablo86 9th Jul 17, 11:53 AM
    • 6 Posts
    • 2 Thanks
    pablo86
    • #6
    • 9th Jul 17, 11:53 AM
    • #6
    • 9th Jul 17, 11:53 AM
    HI @Thrugelmir, 1.64% on a tracker because we anticipated a move.
    • Thrugelmir
    • By Thrugelmir 9th Jul 17, 12:01 PM
    • 56,257 Posts
    • 49,625 Thanks
    Thrugelmir
    • #7
    • 9th Jul 17, 12:01 PM
    • #7
    • 9th Jul 17, 12:01 PM
    Then overpaying the unsecured loans seems the best way forward.
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • pablo86
    • By pablo86 9th Jul 17, 12:15 PM
    • 6 Posts
    • 2 Thanks
    pablo86
    • #8
    • 9th Jul 17, 12:15 PM
    • #8
    • 9th Jul 17, 12:15 PM
    Thanks for your time and advice, greatly appreciated.
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