What should I pay off first? Advice needed.

wannabeasupersaver

Hi my fixed rate mortgage is coming to an end in June. I had one of those 'wonderful' Northern Rock together mortgage before it became an N-Ram one. Now both my husband and I have increased our pay since we orginally took out the mortgage but over the past 5 years we have accumulated a fair bit of debt to the tune of about 28K there about. Now I know we are going to be stuck on the SVR because of this and home valuation etc but I want a plan of action put together so that sooner rather than later we can get a new fixed rate again. Despite a lot of debt, we haven't missed payment or anything like that so once debt is gone credit rating shouldn't be a problem. What I want to know is should we...

1. use surplus cash to pay off unsecured debts (personal loans/cc's) as quick as possible.
2. use surplus cash topay off the loan part attached to the mortgage so that we only have a mortgage without attached loan.
3. pay more off our mortgage to reduce our LTV.

As I said our aim is to be able to make ourselves more desirable to get a new fixed mortgage. Know this is going to take time but don't want it to take any more than necessary.

Thanks for your advice.

opinions4u

If you want to change lender, you're going to need 10%-15% equity in your property. In other words, if your property is valued at £100k you need to get the mortgage debt down to £85k-£90k in order to be able to remortgage. Fail to do this and you're staying on whatever rates NRAM have available.

That said, it is likely that some of your unsecured credit is more expensive. If changing mortgage lender isn't your ultimate aim, paying off the most expensive debt firsy (assuming no penalty charges for doing this) would be the financially astute move.

Thrugelmir

Pay off most debt with the most expensive rate of interest first. Over time it will be beneficial. As you'll gradually being repaying more capital back every month.

wannabeasupersaver

My actual mortgage was 90% LTV when I got it ( the other 10% was the together loan part) however that being said, house prices have fallen since then, so I dont know where I stand on that. Think looks like Im going to be paying the cc's off first as they have the highest APRs one loan is due to come to term in 2 years and the other 2 in 3 years which will make me debt free except mortgage and together loan if I can clear my cc's in that amount of time. That will also be an extra 3 years mortgage payments and providing the SVR doesnt go up by a HUGE amount then we will be in a better position to fix in elsewhere then. Thanks for advice x