Loan or use my cash?

GoodWeather

Hi There,

Would appreciate some help.

I'm planning to go back to college for a year and need some advice on how to fund the fees.

I have savings put away for a deposit on a house and am reluctant to eat into this.

Should I take out a loan to pay the fees or should I use my savings?

I would rather keep my savings and roll the debt I take out into a mortgage in the future, but is this possible in these times when credit is tight?


Advice appreciated

Thanks,

GoodWeather

ExNicotineQueen

How long are you going to college for and what are the course fees?

How much do you have in savings?

CLAPTON

are you talking about a student loan or a normal personal loan?
if a personal loan
-how much will you borrow
-what sort of APR are you going to pay
-what period would be expect to pay it off

geoffky

depends whether you are doing a worthwhile course or will you be joining the other 7.5 million after it ? its a hard choice to make..

masterlumps

personally i would use the cash and start sticking away the money that would have been your loan repayment so you have soemthing at the other end

dtsazza

masterlumps wrote: »

personally i would use the cash and start sticking away the money that would have been your loan repayment so you have soemthing at the other end

Exactly. Why take out a loan from the bank, when you can "take out a loan" from yourself at 0% interest?

After the length of the loan term, you'll have much more money left if you just pay in cash. And if you want to get a house before the loan would be paid back, that may be an issue to mortgage lenders whereas paying in cash would have no impact whatsoever.

At the end of the day I can't see why you'd voluntarily pay interest charges that you could otherwise avoid. "Pay off debts with savings" is a general mantra on MSE, and there's no more convenient way to pay off a debt than not to incur it in the first place!

GoodWeather

Thanks for the advice guys.
I want to be in a position to buy a place shortly after I finish my year out.
I have a job to come back to.
I want to preserve my capital if I can - my savings in other words.
Rather than spend the money on the fees I would like to use my cash as a deposit and roll the fees into the mortgage.
Is this prudent?

Tixy

When you try to buy a property and get a mortgage you have outstanding credit debts then these will be taken into account by the mortgage co when assessing how much they will lend to you.

Rather than spend the money on the fees I would like to use my cash as a deposit and roll the fees into the mortgage.

How would you roll the fees into the mortgage? The mortgage co will value your house, deduct what you say you have as a cash deposit and then lend you the balance (assuming you qualify), they won't also lend you extra secured against the house to pay off your unsecured debts. If you wanted to borrow more than the balance to pay off the loan then effectively you will just have a smaller deposit (or no deposit).

masterlumps

GoodWeather wrote: »

Thanks for the advice guys.
I want to be in a position to buy a place shortly after I finish my year out.
I have a job to come back to.
I want to preserve my capital if I can - my savings in other words.
Rather than spend the money on the fees I would like to use my cash as a deposit and roll the fees into the mortgage.
Is this prudent?

you are not really preserving your capital if you are taking on a loan - false economy

GoodWeather

Thanks guys.
Some good points there.
Probably best to just give myself a loan!