Paying car loan off vs saving house deposit

hazoo

post deleted

bargainbetty

If the loan is due to end at about the time you aim to get the mortgage (2016) then you serve no purpose of your own in paying interest to the bank. Pay off the loan and set up a standing order so the monthly 'repayment' replenishes your savings instead of earning the bank money.

Lenders will consider your income and outgoings across the board - I don't know who told you that they ignore a loan with less than a year to run - you could still go under in that time, so why would they do it?

If you acknowledge that a mortgage and the loan would be tight on a monthly income, then they will see it too.

Good luck

hazoo

Hi Bargainbetty!

Well I have taken your advice. Rang the bank last night and paid off the loan! So now although that is 3.5k taken off my deposit savings, I can save the difference each month and I will (hopefully) seem a more attractive prospect to potential lenders in a year or 2. woo hoo feeling good!

stator

Sounds good, being able to show you are making regular savings every month will definitely make your application look better.
Nationwide have a savings account called SaveToBuy where if you save some money every month for a specific period you can qualify for a 95% mortgage (acceptance not guaranteed obviously). Their mortgage rates aren't great at the moment though. When you come to apply they might be better, so worth considering. It's outside the HelpToBuy scheme, so if that were withdrawn the nationwide one might still exist.

hazoo

Thanks Stator will bear this in mind :-)