Financial quandry, which route to take.

sparkscw

Not sure which forum was best for this, but I'm after a little bit of advice.

I am saving for a house deposit, I get paid fairly well and all my bills are well covered, allowing me to currently save £90 p.week (leaving me with £120 spending money so I could save more if I wanted to). I have various other ways of making some extra cash when needed too so my actual savings figure varies month to month depending how well work is going.

I have a car loan that is currently at approximately £4600 and I have almost £6000 in savings. I am waiting on sale of two bikes and a camper van totalling (hopefully) around £5000 which would leave me with £11,000 cash, a car worth approximately £8000 (current value) and a debt of £4600 (minus £337 per month it takes for the bits to sell)

Basically, my end goal is to buy a house of which I'll need about £15,000 and as I'm buying alone my affordability is important, with the loan on-going I can borrow around £60,000 whereas without the loan I can get double that.

The thing is, it's probably going to be 6-8 months before I save up some more to the £15,000 mark by which time the loan should be around £2500-3000. My question is am I best off keeping the loan going and saving as I am at the minute until I get to the £15,000 mark then re-finance the remainder of the car loan to bring my affordability up, or am I better off just biting the bullet and paying the car loan off now and saving the extra £337 a month? Car loan has about 16/17 months to run.

I'm just worried it'll take longer to get the house if I go down that route, I won't save a massive amount of interest if I pay it off now, I'd be left with about £1500 cash, would be saving at least £600 a month and would still be expecting the £5000 so theoritically if my bits sell quickly I could be left with £6500 cash, saving £600 a month and no debt in less than a months time (if it all goes to plan) meaning I'd have to save £8500 in 6-8 months to meet my same target, albeit this way I'd have a better affordability rate out of it.

I have a feeling what the most common answers will be here, I think I need some reassurance, as you can imagine it's a big decision that I can't really go back from, it makes the most sense, just means that my savings take a massive dive.

Just as a side note, the car is purely for fun, I don't need or rely on it and it's worth more than the loan value at the minute. So potentially when I hit the £6500 mark above I could then sell the car and gain another £7-8k towards the deposit if I can bring myself to part with it!

Your thoughts? :beer: