Divorce Settlement Thru...The next Steps ...

Silence_2

Finally got my half of the money from the house (ex bought me out eventually) and I want to know I'm doing things the right way.

I have a Loan with Northern Rock (£4k settlement)and credit card debts to the tune of £3.5k, £2k of which is on an 0% card till September.

What I want to know is am i right in paying this lot off before I start going in for a new mortgage (intending do so in the next year or so if I find the right house)

My plan is to pay these off and then use the money I would usually use to pay the monthly payments to top up the savings again. (If i follow my budget this could be done in about 6-8 months)


Thanks for any advice in advance.

margaretclare

Hi Silence

It's a basic principle to pay off debts before putting money into savings. The reason is simple: you pay more in interest on a debt than you gain in interest on savings. the only exception is where you can borrow money at 0% so you could leave the £2K until September - but don't forget to pay it off then!

Best wishes

Aunty Margaret

newmoneysaver_2

Any debts you have will count against any mortgage offer ie: most lenders will you 3/4 x your salary - loan & credit card repayments, so it may be better to pay these off before your apply.