Big mistake??

mariebalchin

Hi. New to this so be gentle! lol

I had a large credit card bill but have been paying £500 per month to clear it and have £2500 left to go.

I would like to buy a property at the end of this year as the property market is falling. I will be a ftb and have no savings.

My question is, have I made a big mistake in paying so much on the cc (interest free) as apposed to putting some of it aside and what should be my next move? Also can I use a cc for a deposit?


Thanks in advance

woody252506

Get your card payed off, then start saving, then buy when you have got at least 10% of the purchase price of the house as deposit.

Ive paid off all my CC now and wont go near them again!

whitfreak

I dont see overpaying as a problem. Although is it interest free on purchases rather as well as balance transfers? If your paying interest on purchases or other cards then structure your payments to reduce the interest paying parts. If not then change to minimum payments and save the rest of your £500 a month. Then pay it off completely the month before they start charging you interest. This will hopefully build a small amount of savings to get you started.

While you can techinically use your credit card as a deposit, its a bad idea. Firstly you need around 30% deposite + fees to get a morgage atm, so I doubt you have a large enough credit limit (thinking 35k for a 100k property). And secondly even if you did, you'll be paying a silly interest rate on a huge sum, and have huge minimum repayments even before you get to your morgage (£1750 is 5% of 35k without interest and my minimum repayments on my CC are 5% of the balance a month...)

hamblettamaud

credit card debts don't go away by themselves so i think you did well to get rid of it. plus, clearing it will go in your favour when applying for a mortgage.

QTPie

woody252506 wrote: »

Get your card payed off, then start saving, then buy when you have got at least 10% of the purchase price of the house as deposit.

Completely agreed.

Credit cards are one of the worst types of debt (other than lone sharks) because the interest tends to be horrendous. So there is no point in "saving" when you are being over-charged )well "lots of interest") on your debts. SO, clear you debts first, THEN save.

Don't put pressure on your self to buy "at the end of the year" either: it may (or may not be a good time to buy), but it doesn't mean it is necessarily a good time for YOU to buy. Concentrate on sorting your debts out and getting some savings.

Don't be tempted to put the deposit on your credit card: you will pay through the nose for it, probably overstretch yourself and become another sad "tale of woe" for these boards... Try to get the money another way (extra-overtime, 2nd job, borrow from family) - anything other than credit card (or lone shark)...

Take care and good luck

QT

woody252506

tibtib wrote: »

10% seems slightly small for the current market I think its a safer bet to save 20%

hense the at least

We are FTB and have a mortgage and 10% deposit and are aiming to knock about 20% off the asking price of the places we are going so its the right time for us.:D

Robert_Sterling_3

You are clearing your Credit Card. Excellent :T :T :T :T :T