Larger deposit or pay off debts?

nathand_2

HappyMJ wrote: »

You would need to do the maths yourself....assuming you can afford all the repayments in both cases.

...

So...paying off a loan with £10,000 outstanding and charging 6% interest would save you £600 interest in a year. Is it worth it?

The loan is at 8.4%. The solution that saves me the most money is to pay off the loan but take on a mortgage at a slightly higher interest rate. Keep the credit cards ticking over until their promo period ends and then pay them off with the savings by reducing my outgoings.

I'm self-employed though so I thought I'd be improving my likelihood of actually getting the mortgage if the LTV is <85% rather than 90%.

HappyMJ wrote: »

Why buy a house valued so low with such a high income? Personally I'd aim a bit higher and get a better property. I would aim to spend 4 times your annual salary on a property. No real reason really just the neighbours should be earning about the same as you that's all. Depends if you talk to them, go out to the same places as them and have the same values in life.

I'm 21 so there's plenty of time to trade up. I'd rather have more money left over at the end of every month which can be invested wisely. On the other hand it means I'll see less of a return if/when property prices rise. The reason I have debt now is because I took the opposite approach and simply spent more as my earnings rose. A mistake I won't make again.

nathand_2

getmore4less wrote: »

The main advanatage of spending more to get a bigger place is you can skip a move should that be obvious in a shortish period<10 years, does not help if other factors like new job/area forces a move anyway.

A possible reason for staying low is to have plenty of surplus cash save a new deposit start a letting business..

My thought process exactly.

I'm a remote web developer so there's no risk of having to move because of my job.

Once I've bought my first property and built up a decent emergency fund I'll be putting all my leftover cash towards saving another deposit for a BTL.

getmore4less

You might want to look at offset options.

They are a great home for your surplus cash flow cash emergency savings and savings you would use at somepoint to borrow back for another BTL.

Dump the loan at 8.4% and start preserving cash(spending less).