Snowball isn't very helpful cos these debts are a bit complicated

Karmacat

In a way I'm not surprised snowballing hasn't quite answered the situation. This is how I stand right now:
- £2574.98 on a Cap One credit card till 1 Jan 2008, minimum payment is 3% of balance, so April's payment, just gone, was £79.63
- £8220.66 outstanding on a Northern Rock loan, fixed 5.7%, payment of £156.57. I could repay this from savings, but my accountant has analysed the figures, and because this loan is in relation to a property abroad, I can get tax relief on the interest. These two facts taken together mean that I am better off not paying the loan off, to the tune of £84 a year. Life is strange.
- a mortgage on the house I live in of £43,000, interest only tracker mortgage with Nationwide, deal is set to expire at the end of May, and I have an appointment with them tomorrow, but the current rate of interest is 5.29%, meaning a monthly payment of £188.71 per month. This is set to expire in October 2012. I have an endowment policy set to cover this (oh, thats the remaining problem that I need to go through this site about) but it won't cover it; it matures in January 2012, all the same. There's a teeny little overpayment of £100 sitting on this account, which has been taken into account on the monthly figure given, because the rate has changed since then, and thats how Nationwide work it.

So. I'd like to make some overpayments *somewhere*. But it would be silly to pay off the Cap One, cos I'm not being charged any interest. The loan is benefitting me tax-wise. That leaves overpayments on the mortgage, which will be useful anyway as they'll still be accessible in an emergency if I stay with Nationwide, and cos I know the endowment won't clear it.

Does anyone have any feedback about this? Please?:o. It looks logical that I make the overpayments on the mortgage, but am I (or my accountant!) missing something

Two9A

If you know the endowment won't clear the mortgage, then personally I'd put the overpayments towards the Cap One.

The interest-free period only lasts through to the end of the year, and then you'll start being charged something exorbitant. If you can bring down that balance by a significant amount, you can seriously cut down the minimum payments for 2008, and redirect that money to what's left of the mortgage after the endowment payoff.

Unless, of course, you intend to transfer the Cap One balance to another 0% next year, in which case you can safely ignore this ramble

Karmacat

Thanks Two9A, I know what you mean. I *do* intend to transfer the Cap One balance to another 0% next year, it will still be worth the interest saving, even if the fee is 3% or something. At the end of that one, it will probably be better to pay it off altogether. It just seems so crazy that the most moneysaving thing I can do with my money seems to be to pay down the mortgage, even tho I have a credit card and a loan outstanding.

CLAPTON

you dont say how much savings you have but..

it seems to me that you need to make provision for clearing the cap 1 card once the 0% deal runs out. even if you can get a new deal by the time you pay say 3% fee for 6-9 months its costing you more than you are earning in saving .
so if you can't clear the cap 1 at the end of the deal with your savings, i would suggest you simply save as much as possible in a saving a/c until the deal ends.

once that's taken care of then overpay the mortgage is the next best thing to do especially as the interest rates are probably set to rise.

Karmacat

Thanks Clapton - thats another person who thinks the same way as me and my accountant.... so future action seems to be, save as much as poss, renew the 0% deal when its due to expire, then get the mortgage down. In the meantime, look at what Martin's got on this site about endowment policies and what to do with them.

RAS

If you have not already used this years allowance..

Put the money into a high interest ISA until January?

A bit of extra interest to pay it off.

Karmacat

Ah, how true. I just noticed that Barclays do one for 6.5% for new money. And the figure from my accountant of £84 depends on moving the money to a higher rate ISA (currently Northern Rock old ISA, stupid rate of interest).