Trying to go debt free!! Advice Please.

Coulsa

We are trying to go debt free. We would like to pay off our debts within 3 years. As well as selling our car which is fully paid for - to pay off some of the debts - we are not sure whether to go interest only on the mortgage with NR for 3 years and with the money we save pay off the rest of our debt. Meaning in 3 years time we will be completely debt free and have an extra £750.00 a month income which means we can pay additional amount of a repayment mortgage!

Advise Please.

Debtfreee

Hi,

I'm also trying to reduce my debt as quickly as possible (£45,000 when I entered DMP!!)

I switched my mortgage to interest only and used the extra money to increase my payment to creditors, I worked on the basis that the quicker I paid the debt off the more money I would have to pay the mortgage off so 100% agree with you on that. I feel that the 20% apr credit card's are more important to pay quickly rather than struggling to pay everything (i.e. mortgage and credit cards) and not actually reducing the balance on anything in any significant timescale.

fatbelly

From the little information you have given in your other thread this may well be a good idea.

Why not post a statement of affairs to give a better picture?

DVardysShadow

It makes sense, if for each and every debt you deal with this way, the interest rate is higher than the mortgage rate

Coulsa

We decided we going to ask the bank if we can go interest only and have been given a price for our car which means we can pay off our debt on the credit card.

The thing I am wondering about is a loan that we would like to pay off approx £16,000. I am not sure how to go about paying off the loan. Do I put the money in an account and then in 3 years pay off the remaining balance or do i offer to pay the loan company an extract amount per month?? What is the best way to do things?

Thanks for all your help so far

anonymoose_3

If you call the loan company they will give you a settlement figure for if you paid it off in full now, or if you don't have enough to settle the balance they will advise if you are able to overpay.
x

Coulsa

No dont have the money now to pay off planning to pay an extra £400 a month off the loan per month which means in roughly 3 years will have paid it off. Just want to know whether First Plus will allow us to do this or whether we would be better off saving the £400 and then when we have saved up the remaining balance ask for a settlement figure and pay it off?