HP, credit cards and mortgage.

MrWillyWonka

Hello!

I require some advice about a financial situation.

My partner and I currently have about £5,000 of debt and at the current rate of paying off we will be debt free by the end of the year. After this we will be saving up for a deposit for our own house.

After we have paid our debts we will be able to save about £1750 to £2000 a month however currently my partner is desperate for a new car (the current one may not survive this winter). Our dialemma is whether to put paying the credit cards on hold and use our wage to save to buy a new car or go for HP. We would require a more modern and efficient car (£5000 max).

You could argue that we should wait until the car finally gives way however it only does about 25mpg and fuel expenses are about £250 a month plus £255 a year road tax (renews February).

The question, would HP make it more difficult to get a mortgage? Would paying off the credit cards sooner rather than later make it easier to get a mortgagte or better rate? I am gearing towards the latter, in terms of fuel efficiency, it may end up cheaper to delay the credit card and pay interest but it is also important to us to be able to get a mortgage in about a year's time.

Thanks in advance, bedtime for me!

Thrugelmir

Pay the minimum off the credit cards and buy a car for cash. Learn to live without borrowing.

MrWillyWonka

Thrugelmir wrote: »

Pay the minimum off the credit cards and buy a car for cash. Learn to live without borrowing.

As in put the credit cards on hold (minmum payments plus a little bit more)? We are keen not to have HP but at the same time want our cards paid off.

DannyboyMidlands

If your desire is to buy your own house then you need to focus on this and stop borrowing money for other things. After the car it'll be Xmas, the maybe some January sales bargains, then a holiday...........

Live within your means. You can buy a lot of secondhand car for £1500 cash these days and you might get £250 scrap value from the old one so in reality only spending £1250.

Just for one month pay off a little bit less on the credit cards, buy the car (a cheap one!!) and then start paying off the cards again.

MrWillyWonka

80% of our Christmas shopping is already done (we get them early in the summer sales!). Holiday is done (no more holidays next year) and our focus is to buy a new house however my partner does a lot of driving and a new car is a must.

We could get another older car but we were hoping for a newer car to last for a longer period of time which would end up cheaper and newer cars are more fuel efficient. We have discussed and HP is out of the question.