Pay off debts or save up for house deposit?

CLAPTON

as your questions are clearly unanswerable / unknowable you may wish to investigate an answerable and more relevant question:

although I don't know the answer myself, clearly a mortgage advisor would be able to tell you the current position:

that is... how do lenders take into account your debt... if e.g. they net is off your debt against your deposit then clearly there is no point in having the debt

or maybe some look at affordabilty.. i.e. if you are having to make debt payments every month then they may reduce the amount of mortgage they offer.

so it may be to your disadvantage to hold onto the debt even without taking into consideration the interest you are paying.

MrDT

Ian_Griffiths_Halifax wrote: »

some stuff.

New avatar Ian?

Ian_Griffiths_Halifax

Yes. I was messing around in the bedroom last night and I slipped on my basque and put the camera on delayed action shot. I don't have a bad bod for a 42 year old bloke, even if I do say so myself.

You like?

MrDT

Ian_Griffiths_Halifax wrote: »

Yes. I was messing around in the bedroom last night and I slipped on my basque and put the camera on delayed action shot. I don't have a bad bod for a 42 year old bloke, even if I do say so myself.

You like?

Anticipating this kind of response is exactly why I didn't add a creepy spinning thumbs up Martin smiley to my post

Not bad to be fair, you must work out

Thrugelmir

1. when's the bottom of the market going to be? Will clearing debts mean I miss the bottom?
2. what sort of finance will be available on mortgages in 2 years time? Would having a reduced deposit mean either a rubbish rate or no mortgage?
3. what effect would inflation have on my debts?

1. The market bottom will happen before you realise. Only as historical house price data becomes available will it be clear. So buying a property may be more a question of buying what you want when you see it ( ie your dream home) and can afford it. Clearing debt which is costing you more interest than you can earn. So always clear debt first.
2. The days of cheap money are over. Mortgage funds in the future will be determined by supply and demand. When demand picks up so will interest rates. Banks may prefer commercial lending to private as its more profitable. Keep saving for a deposit. You might consider a local building society who offer good rates on regular savings and would consider your application for a mortgage more readily at the point you are looking to buy.
3. Over the longer term inflation erodes the value of debt ( in the same way it erodes savings).

[Deleted User]

Ian_Griffiths_Halifax wrote: »

How long have you had the car? Does the agreement you have, allow you to hand the car back without any further liability, after you've made (I think) half of the payments? If so, then you may be able to hand it in (this doesn't effect your credit rating as it's part of your agreement), then buy a cheaper car for a cash lump from savings (try the auctions). This way you reduce outgoings, have a car and don't use as much of your savings.

This aside, I would pay off the debt before saving for a deposit.

Ian, this is called Voluntary Termination which, so long as your agreement is regulated by the CCA (Borrowed less than £25k) you are able to hand the car back once you have paid half the total finance.

OP, It does effect your credit rating and will state that you have done so, this wont effect other debts but bear in mind if you intend to get a car on finance again you may be refused because on this.

Depending on what sort of car you have, i would consider it as for 2/3 months payment you could get another car and save the rest, youre really just leasing the car on PCP as youll have a balloon amount due at the end and probs hand it back then as it wont be worth the GFV.

No one really knows the answers to your first two questions but a mortgage will be easier to arrange if you have no other debts, get them cleared asap.

Ian_Griffiths_Halifax

Supercharge_Me wrote: »

Ian, this is called Voluntary Termination which, so long as your agreement is regulated by the CCA (Borrowed less than £25k) you are able to hand the car back once you have paid half the total finance.

OP, It does effect your credit rating and will state that you have done so, this wont effect other debts but bear in mind if you intend to get a car on finance again you may be refused because on this.

Are you certain about that. I've no experience of it myself, but if it's part of your agreement to be able to do so, then how can it effect future finance?

[Deleted User]

Ian_Griffiths_Halifax wrote: »

Are you certain about that. I've no experience of it myself, but if it's part of your agreement to be able to do so, then how can it effect future finance?

100%, it will show on your credit rating that you have Voluntary Terminated the agreement.

Whilst you are well within your rights to do this, if you chose to buy another car and BMW for example see this, they are unlikely to want to finance you if youre going to VT as they will make a loss more often than not.

It wont effect your chances of getting a loan through the bank or elsewhere, but it will be a factor in obtaining a new car finance agreement.