Need some advice please =(

Phaelok

Hi everyone,

I currently have £12,500 saved in a Natwest E-ISA account and this rate is scheduled to drop to 1% at the end of January.

In addition to the above, I also have a Natwest loan and pay £246 per month with the settlement figure now £3500.00

I save at least £500 most months and sometimes put more aside, however I am in two minds as to what to do concerning the loan. Should I pay it off or continue with the payments? To be honest the £12.5k is being put aside for a deposit on a house and it would take me approximately 6-7 months to get it back up to the original amount.

I am pulling my hair out - should this loan be paid off?

Wilkins

Phaelok wrote: »

Hi everyone,

I currently have £12,500 saved in a Natwest E-ISA account and this rate is scheduled to drop to 1% at the end of January.

In addition to the above, I also have a Natwest loan and pay £246 per month with the settlement figure now £3500.00

I save at least £500 most months and sometimes put more aside, however I am in two minds as to what to do concerning the loan. Should I pay it off or continue with the payments? To be honest the £12.5k is being put aside for a deposit on a house and it would take me approximately 6-7 months to get it back up to the original amount.

I am pulling my hair out - should this loan be paid off?

In simple arithmetical terms you should pay off the loan, but only you can balance this against your desire to get a house in the near future, since possible changes in the property market and the availability of mortgage deals are rather difficult to call. Sorry, not much help.

Archi_Bald

You are most likely paying quite a steep rate of interest for that loan - a multiple of what you get in the ISA.

It should be your highest priority to pay it off asap.

Masomnia

4 and a bit months to get back to where you were if you save the money you were paying towards your loan.

staffie1

I would pay off the loan. You will soon replace it by saving £746 pm.

If you apply for a mortgage while still owing on the loan, the amount you still owe will be deducted from what you can borrow anyway.

jimjames

Masomnia wrote: »

4 and a bit months to get back to where you were if you save the money you were paying towards your loan.

And the benefit that you aren't paying interest at 10% or so on the loan once paid off.

Phaelok

jimjames wrote: »

And the benefit that you aren't paying interest at 10% or so on the loan once paid off.

Thank you all for your advice.

I have now paid the loan off in full and remain debt free!!!!

Now to start saving again for that mortgage! :j

Gromitt

Phaelok wrote: »

Now to start saving again for that mortgage! :j

Don't save for too long as property is meant to be on the up, and you don't want it climbing faster than you can save. Remember that 95% mortgages still exist and it may be worthwhile overpaying rather than trying to build up a 20% mortgage.

Is 190K enough to purchase a property that you like? (Assuming you have appropriate income)

Masomnia

Phaelok wrote: »

Thank you all for your advice.

I have now paid the loan off in full and remain debt free!!!!

Now to start saving again for that mortgage! :j

Congrats on being debt free.

We can't really tell you what to do on here, but I think you've made the right decision

Best of luck for the house.

kingrulzuk

Phaelok wrote: »

Thank you all for your advice.

I have now paid the loan off in full and remain debt free!!!!

Now to start saving again for that mortgage! :j

Well done mate

Wish i could be debt free