Maximising Offset Mortgage Savings Whilst Purchasing Next Car

natalieadams

Hi All,

Not sure where this thread may go but this seems like a good place to get advice.

I have a car on finance - currently £149 a month with a £16k balloon payment due in January 2011. We also have an offset mortgage, with some savings that are currently offsetting the mortgage - it is from these savings that the balloon payment will be paid.

I can't help but feel that, rather than complete the balloon payment in January, I should engineer things so that I continue to pay a monthly amount and leave the savings where they are - continually offsetting the mortgage, and be in the position where I don't truly own the car and the finance company do (and potentially duplicate this cycle).

The problem is, I can't see the detail beyond this open-ended ideal. I guess I will need to replace my car in January to make things happen, but I'm flexible either way? Getting rid of the car brings it own problems - the dealer says it's lost 20% in 14 months, whilst a private sale won't necessarily net the full second-hand value either (as it costs a bit to look after).

Can anyone offer me any advice?

Thanks in advance.

vaio

I don’t really understand the intricacies of the car finance details but would have thought that car finance would be more expensive than house finance and therefore the car should get paid off first.

plane_boy2000

Your PCP must be a good deal to allow a 16K baloon and only be 149 a month - what car is it? Did you place a large deposit up front?

I understand your logic, but I cant see you getting car finance cheaper than your mortgage rate, unless you get a new car with a cheap / 0% deal

Do you need that car or could you get something cheaper - i.e buy a car for 10K still leaving 6 in your savings and have no payments to make so you could add you 149 to your mortgage payments