Karmacat: To Infinity And Beyond!

Karmacat

Thats a good question, Hypno. What it highlights *is* my feelings, actually - I think its insane to keep paying a loan at 5.7% when I have an overpayment that could draw on to pay it off. I certainly wouldn't fritter away the £157 that gets freed up - I'm not making enough at the moment to cover my expenses, so that would get stashed in a saving account to get called on for annual/quarterly bills. I wouldn't change my outgoings at all.

I *do* remember you paying things off against the snowball order, so to speak .... and that thinking, of doing whats right for me against the snowball, is what's kept me keeping on with the loan. But its now comparatively near the end of its life - it will finish in two years, I've just checked, in April 2012.

I have been wondering about leaving it to run until I move, vaguely something about having more capital on hand to show them - but then, its more debt too, isn't it (its not very *much* debt, but my income is much lower now than when I took the loan out).

Okey dokey, thanks! Thats taken me on a step.

taxi73

Personally myself I would pay off the NR loan as it will give you peace of mind because it's gone and secondly because you are not bringing in enough to pay your bills so wouldn't want to fall behind with it....also if you were unable to work at anytime it's one less bill to pay.
The freed £157 I would either put into the mortgage overpayment or keep for quarterly bills but because you can draw down on the mortgage I would be inclined to put it there.

EssexHebridean

Is the figure you've quoted on the NR loan the actual outstanding balance "right now" or is it the figure they would settle on if you paid it off immediately? Mine was only a short-ish term (30 months) but by paying it off in less than half that I saved a surprising amount on interest and the PPI - (and then of course I claimed back the PPI anyway!) so this is well worth looking into. IIRC the original paperwork for the loan included settlement figures at various stages so might prove helpful.

Karmacat

Thanks Taxi! Having written it out and thought about it, and realised there's only two years to go anyway on it, I think thats what I'm going to do - its done its job, in that I wanted flexibility, but now its a millstone. Brill!

Karmacat

Hi EH - they would only charge me that little if I were to pay off the loan in full - if its a settlement, it would be maybe another £1000. I've just been off looking for a recent letter that addresses exactly this point, but I can't lay my hands on it right now- but I'll check, thank you.

taxi73

Well that's that sorted then.

Karmacat

:j:j:j If only the rest of it was as simple!

taxi73

It will be...one step at a time.

Karmacat

:kisses3::T:A

Wol2

Hi KC

Just popped on in response to your PM...

I too would pay off the loan as it would not only free up the monthly cashflow but also improve your credit rating.

You plan to sell the house and will therefore have to pay off the mortgage this year - and from what I understand, you are planning to be in a position where you don;t need another mortgage to buy a new house.

So all in fact you;re doing is transferring the loan debt to the mortgage, but paying less interest, and reducing the amount of cash you will have available when you sell/purchase by £3705 - (although if you plough the £157 per month back into overpaying the mortgage over the next few months then your 20k pot to go towards the French mortgage would stand at about £17,300)


(Of course there is another option - the MBNA super balance transfer -but for a 4% fee so would cost about £150 - you pay off the loan and transfer it to a 0% for 13 months with minimum payment each month - keeps your mortgage overpyament intact and the £157 goes to reduce the balance on the CC each month. You then pay off the residue either when you sell or once the 13 months is up)

Is there a penalty for paying of the loan early?

xx