pay off £25k loans by opting for an interest only mortgage?

thebaddeleys

these are mine and my husbands outgoings, we are thinking of doing an IO mortgage and saving up what we would have spent on the repayments and then when we've saved up enough or at least enough to pay off our biggest loan (£12k) then we would switch back to a repayment mortgage. would this work is it a good idea???


House hold bills

Mortgage- 975.4
Mortgage Life cover- 24.38
House insurance- 30.35
TV licence- 10.59
Child maintenance- 270
Council Tax- 119
Talk Talk- 20
Tiscali- 15
Gas / Electric- 43
United Utilities- 39.68

Extra items

HFC (Dinning Table) 0%- 23.17
David Llyod gym- 55
Sky- 36
Blackhorse (TV) 0%- 43.77
Sofa (Blackhorse)- 50
Car (blackhorse)- 205

Tesco car insurance- 42


Loans

Abbey Loan (9.6%)- 163.13
Tesco loan (7.3%)- 252.09

O2- 60

Food- 200
Gold HSBC card- 35


Totals Outgoing-2627
Total income- 2891.24

any advice would be great !

please help????

southernscouser

You need to ask yourself how long it would take to save up enough to pay off a £12,000 loan and will you be disciplined enough to stick to it?

CLAPTON

your figures show a surplus of over 200 per month after spending and minimum loan payments.....do you actually find you have this and if so what do you do with it?

you need to find out the APRs of all your debts and ensure your are paying any surplus to that with the maximun APR.

the layout of your SoA is a little confusing so i may have misunderstood some of it.
for loans the key information needed is the monthly repayments, the number of months left to pay (hence giving the amount outstanding), whether the loan is fully flexible (if not what happens if you repay early or make partial payments and the APR)

for CCs the information needed if the current balance, monthly minimun payment and the APR.

the idea of transferring to interest only mortgage (are there any costs of doing this ?.will the lender allow this without an agreed repayment mechanism?) is basically a bad idea unless the situation is deperate or there is a clear certainty of better days ahead (i.e. promotion / better job/ inheritance). in addition to the possiblity of costs transferring to interest only, it will be very difficult to be disciplined enough to save the money...in any event you should target high APR debt first.