what would you do?

roymoz

good morning. I hope I'm able to get some sound advice without being put down as I have before?! I will soon be in a position to pay off a £9k loan, which I took out in feb/march this year. the loan cost's £183 a month and is over 5 yrs. affording this is no problem whatsoever. my question is- am I best to pay off the loan or put the £9k towards my mortgage, seeing as how I failed an affordability test a few months ago? don't want to put the money to the mortgage if I'm going to fail again! at the moment I'm thinking to pay off the loan & use what was the loan repayments to overpay on my mortgage. thanks in advance,roy.

Mortgage_Mark_2

Hi Roy,

In terms of mortgage affordability, you'll probably find that you're better off paying off the mortgage, as the £183 a month is effectively taken off your income for mortgage purposes to ensure that you can service the debt. This does depend however on the level of deposit that you have, as if you only have 10% even including the £9k then it may not be feasible to repay the loan and to have enough of a deposit left over.

Best advice would be to speak to a broker and go through all of your finances with him/her and they can advise further when they've got all the details to hand.

getmore4less

What do you need the affordability for?
Better rate, moving house, something else?


was the previous affordability failure before or after the loan


What rate is the mortgage


What rate is the loan


What penalties are there on the loan
(it should be possible to reduce these with a large overpayment then let the monthly payment finish of the loan.

kingstreet

Looking at the OP's previous posts (to try to establish what "without being put down as I have before?!" meant) there's a matrimonial transfer of equity floating around in the background and this is the reason for the affordability checks earlier.

Building a picture in one thread works far better than several disjointed threads over a number of months where salient details are not carried from one thread to another.

roymoz

yes. my ex wants to come off the mortgage & doesn't want anything from me as she's living with another partner. I failed the affordability check & she's decided to stay on it for my benefit, for a year or so. I have been slated before-not just on here. I know I'm bad with money. if I wasn't I wouldn't be here asking for people's advice! the check was made in may, after the loan went through ok. mortgage rate is 2.5% variable. loan rate is 8.5% I think. it was all done online inc e-signature. I have no paperwork, only the amount for the loan & length. not looking to move house-unless I have to. thankyou for taking the time to reply guys.

Thrugelmir

Settle the loan first. This will improve your position in terms of obtaining a mortgage at a later date.

Is the mortgage on a repayment basis?

roymoz

yes. it's a repayment mortgage. I've been paying it on my own for 3 years. it was £518 a month but it went down in aug 13'.

TBagpuss

settle the loan. That should then mean that you are treated as being able to afford an extra £183 per month on the mortgage, so you will have a better chance of passing the affordability next time.

Did you speak to a broker about remortgaging or just to the existing lender about getting your wife's name off? If it was the latter, then it may be worth speaking to a broker to see whether you might be more successful with a remortgage, once you have cleared off the loan.

in the mean time, obviously you need to ensure that you don't take out any additional loans, and try to reduce any other debts you have.

amnblog

Settle the loan?

or speak to someone 1 to 1 who knows what they are talking about first?

I know which makes more sense.

roymoz

settling the loan??

Cypherite

I'd say talking.