Planing on moving.... preparing finances

SplanK

Hi all,
We are planning on "being ready to move" in Feb, I have projected between now and then that we will have reached our savings target for a deposit + costs the price range we are looking for...


This is through a combination of saving like no tomorrow through each month and the wife's redundancy/maternity package as a "top up" to the savings goal.


I have yet to approach Natwest regarding looking for additional borrowing on our existing fixed term (it is allowed, I made sure when we re-mortgaged!!) so only using the rough and ready guide on their pages, I don't see the point in approaching this early.


We are "good" in terms of credit, I have 2x credit cards (0 balance each month), the wife has 1 credit card (again, 0 balance each month), but in March I purchased a new car and took out some finance on it...and that's it!


We knew about the redundancy, and it was always my intension to pay the car finance off with the redundancy, I have estimated there to be around 7k left in Feb.


Now, I am in a quandary. The loan is costing £270 a month so is a decent whack out of our monthly wage so I thought paying off the finance would help us with mortgage affordability checks/chance of getting the additional lending we need if paying off would help.


Now I am reading, paying off the finance could have a negative effect as it can effect credit/debt ratio and score against us. Looking on the Natwest website however, throwing in the £270 payment figure has an effect of lowing our potential mortgage offer of around 10k!!


The other thing is, I was reading before that paying off the finance could take a month or 2 to be confirmed on credit checks, once we have hit our goal we want to start things rolling, not having to wait around for a while after.... So now I'm thinking if I am going to pay it off, do I pay it off sooner with the savings we have got now, and let the redundancy amount bring us back to where we want to be.... or do I hang onto the finance! ARGH!


My gut feeling is to pay it off in Feb when the redundancy money comes in and keep to my original plan, but I cant help feeling I am setting myself up for a fall somewhere!

Thrugelmir

If you've the cash saved then now is the best time to pay off the debt. Then it's done and dusted. One less thing to worry about.

RavingMad

Would the 10k mortgage shortfall affect you when you start looking at houses? If so, then pay off the loan first. I'm guessing the earlier you pay it off, the less interest you will be charged?

If you don't need the 10k, then perhaps keep the car loan and put the money you would have used onto the deposit of the house. But then you have to service a mortgage and a car loan. Is that affordable?