Settle early or. . . save?

stqueen

Hi All,

I did think about posting this in the Savings thread but after a quick squizz on there I thought again

My partner and I want to buy a house in early 2013. He has some savings already, and already has a plan set up which means he will have his half of the deposit we will need by this time. I need to get going with the saving of my half ASAP.

However, I have a couple of debts and my question is, do I work hard to clear them both before starting to save (with a clean, debt free slate) or do I start saving now, and continue with the debts until they are paid (both are loans, as below, set monthly payments, but neither impose a penalty for overpaying or settling early). They are:

- Egg Loan, 7.6% APR, £97 per month (Current balance £3100, finish March 2014)
- Santander (Car), 18.5% APR, £110 per month (Current balance £1711, finish July 2012)

My thinking at the moment is to pay both of these off as quickly as possible (settling early) then start saving (as it will free up an extra £207 a month). My other option of course is to keep them running, and start to save alongside them. Any thoughts on what would be the best thing to do here - start saving now or pay both off first??

Just wanted to reach out to you lovely people for your thoughts in case I have missed anything glaringly obvious in my thinking :rotfl:

ShAnE

My thought would be to pay them off, if only to help with getting rid of the interest rates on them, and then start saving hard. Especially with saving rates being fairly low atm.

[Deleted User]

To minimise how much you pay, and to maximise your savings, always pay your debts first unless you can get a savings account paying higher interest than what you are paying out - at 7.6% and 18.5%, you're not going to find this.

My suggestion would be to keep paying the minimum off both - then overpay all the surplus you have towards the one charging 18.5%, when this is gone snowball the amount you were paying towards towards the 7.6% loan.

Then save when you are debt free

Domino9

dano17439

your mortgage company will look at what debts you have before they decide how much they will lend you so pay off as soon as you can