Overpay or not?

Charliefiggis

Morning,

We are in 2 minds as how to proceed.

We have a mortgage of £115k, value of house approx. £145k.

We have a debt which is on a charging order for £18k, we have a payment plan on this and no interest to pay.

We would like to move in about 2 years. I have looked into OP's and we can do it without penalty, the only thing is we have to make a minimum of 3 months at a time, so £1,760 at a time.

The interest rate is 3.99 above the LIBOR on the mortgage and on the debt its nothing.

So would we be better off OP'ing as often as we can on the mortgage and then using the equity to pay off the debt at the time of moving, or paying off the debt first. Also not sure how it would affect our chances of getting another mortgage?

Any advice, opinion are greatly welcomed

originalmiscellany

Surely if you are going to move, debt is debt, so whether it's in the lack of v alue in your house (compared to mortgage) or the charging order, banks will frown upon it?

I'd say clear the charging order as if I was a banker I'd see this as a major problem on your credit rating (I'm not a banker so might be talking a lot of rot!)...

Thrugelmir

While the debt on the payment plan incurs no interest. The downside is that it's wrecking your credit record. There's little possibility of obtaining a new mortgage until a suitable period of time has elapsed after the debt is finally settled.

So while you think that you being clever. The lenders themselves hold all the aces.

Charliefiggis

I don't for one minute think I'm being clever!

Just wanted advice on the way to go. I thought more equity to give a bigger LTV would have been a good idea, but I wasn't 100% sure which is why I asked the question.

Thank you both for answering