Where to put the money to make it work for us?

thrify123

We have Northern Rock together mortgage (125%), this is the last year of the fixed rate and we want relocate to a slightly larger and therefore slightly more expensive house. When the fixed rate comes to an end we transfer onto the SVR which means our repayments will be less but we won`t reduce our payments. The mortgage and the unsecured loan (which form the together mortgage) will very soon be our only debt (if you don`t include student loan via the student loans co) and so need to make some headway on reducing this debt so that we can move.

The unsecured element is just shy of £30k and the mortgage is £95k. I think our house is probably worth around £100k . We have a joint income of £60k. Should we concentrate paying off the mortgage element or should be be putting some on the unsecured loan? whats the best thing to do?

I would hope that when the time comes we would be able to buy a house for around £140k.

What do you think? is this realistic - would we get a mortgage ?

Thanks in advance for your opinion!

dimbo61

At this moment in time you are in Negative Equity so its not really that important which you pay off first if they both have the same interest rate.
The loan is the smaller amount so it might help if you reduce that first.
You dont give your mortgage rate but even on the SVR you wont get that from saving money in savings accounts so build up an emergency fund 3/6 months of income and then overpay with every single spare penny you have.

thrify123

The interest rates are the same for both elements. Should we be paying as much off the loan first and then concentrate on the mortgage or should we be putting all funds on the mortgage so that we can build up some equity and be in a stronger position to get a mortgage regardless of having the unsecured loan?

I`m really confused as to what will put us in the strongest position.

CloudCuckooLand

Lenders will take the overall position into effect. In some cases insisting on loans being repaid before advancing funds, in others declining to make a mortgage offer at all.

Save, save, save.