Loan Advice Please

haie

Hey folks,

First time poster but long time fan of the site. I am looking for much needed advice if possible regarding my current loan. Apologies if this is a tad long winded.

My wife and I have recently separated and following this she has taken over the flat we shared. She 'bought me out' of the flat and i was happy with the figure i received. Currently I have an account with £12,500 in it from this so it is very healthy and i love having this security.

On the 30 September i pick up the keys to my new house and 10 days before this i need to pay the £5000 deposit and fees which amount to £5250 in total. This would be coming from the account that i have the £12,500 in. This would leave me with a nice little nest egg.

My dilemma is that i currently have a Halifax personal loan which has approx £11,300 left to pay with a ridiculous interest rate of approx 16%. This equates to a payment of £269 per month.

Should i pay off this personal loan with what i currenlty have in my account and look to take out a smaller loan to cover the deposit and fees, which would leave me with a smaller payment per month on which should be a smaller % rate.

I am pretty sure that i know the answer to this questions because if it was me who was reading this i would be saying 'pay off your loan'. I do however like the idea of having a healthy bank account which can be dipped into when necessary, although not regularly.

Any constructive advice would be greatly received and welcomed.

Thanks
Haie

KingElvis

bank loans for house deposits are a complete no no so pay that from your settlement.

haie

Thanks for the prompt reply. Could i not declare that the loan would be used for a deposit on the house but say for a car laon for example?

Thanks

somethingcorporate

Commit fraud you mean? Why not use your cash to fund the deposit and refinance the loan with another cheaper loan?

Different (and legal) way of skinning the same cat.

KingElvis

Trouble is, any misinformation on a mortgage application could lead to the bank withdrawing the offer, if that was to happen between exchange and completion you'd be in a very dark place.

jonjamie1970

somethingcorporate wrote: »

Commit fraud you mean? Why not use your cash to fund the deposit and refinance the loan with another cheaper loan?

Different (and legal) way of skinning the same cat.

Agree with this, if you can afford it, renegotiate your loan with someone else, dont do it before your mortgage is sorted though as you could jeapordise the offer.

Pay the depoist with your cash surplus and keep saving the rest, put it in an ISA or something else.

haie

Thanks to all who have replied.

So it wasn't as easy a question as i though after all. I actually thought i would have been told to get rid of the £11+k loan first.

I can see where you are coming from and definitely now have more to thionk about.

Can i go into my current loan lender, who all my bank accounts and my soon to be mortgage is with, and look to renegotiate my loan with them? Could i use what is left over after i pay the deposit on the house to lower my loan and negotiate a lower interest rate to bring the payments down?

Thanks again folks

KingElvis

Before you do ANYTHING else, get your mortgage completed.

Banks will see any negotiation as a sign of financial strife and maybe pull the plug.

DON'T apply for any credit cards, loans or other shizzle until you've completed.

Good luck.

Tixy

Yep sort the mortgage first.

After thats done and you have completed the purchase and moved in you can then either try to find a cheaper loan for the difference between what you owe on existing loan and what you have left of your savings. Or see if you can make overpayments on the current loan and pay off a lump sum.