to overpay or pay off credit card debt when in negative equity?

wenders27

Hi everyone,

Im brand new to this and have stumbled across this forum whilst looking for advice.

Our fixed rate is due to come to an end in March. we got 100% mortgage just before the prices dropped and are apparently in negative equitity by £18,000. (this is according to our mortgage companies estimate)

Anyway we have been overpaying our mortgage by £100 a month for the last year - however now our fixed rate has come to an end we drop to the SVR and our payments go down from £934 to £718 a month. We both have credit card and loans which we have been comfortably paying off but also give us the opportunity to overpay without any penalty.

So the question is do you think we should overpay our mortgage to try and bring out LTV down with the extra money or pay off our debt? We have worked out we will be credit card/loan free within 18 months if we do this and our only debt will then be the mortgage.

We know we cant really move until we get some equitity in the house and would want to in the next 5 years or so but its not a major priority.

Can anyone please give us some advice - there seems to be none on the articles etc I guess we are in a less common situation!

thanks in advance and for such a great informative site!

wendy

Joe_Bloggs

Welcome to the forum.
Consider paying off the debt that is at the highest interest rate.
J_B.

Dogz111

Joe_Bloggs wrote: »

Welcome to the forum.
Consider paying off the debt that is at the highest interest rate.
J_B.

Agree 100% with this.

You need to reduce your interest bill as quickly as possible. So I guess pay credit cards then loans then mortgage.

Negative equity isn't really an issues unless you are forced to sell and crystalise the loss.

wenders27

thats great thanks everyone, credit card it is!