Advice welcome

rachael18

Hi

Finally want to start planning financially and getting myself in a better financial situation but want a little advice to get me going.

I am currently in negative equity on the mortgage, probably by around 10k so we are unable to change lenders for a better rate.

We also have an unsecured loan over the same term of the mortgage which there are 28 years left with a balance of around 10k.

So here's what I'm asking...

I've started to build up a good savings pot, once I've finished saving for my emergency pot I'm trying to decide what would be the best use of any further savings.

Would I be better to-
A) save up in a savings account and use the money to put down with a new lender
rather than save up, make overpayments on the mortgage to allow me to be in positive equity and change lender for a better rate
C) use any savings to pay off the unsecured loan by either making overpayments or saving in a savings account

Thanks

amnblog

a) This does not remove the negative equity problem on the current property
b) This would have that effect - you need to know however that if [assuming you are with the lender I guess you are] you pay off all of the secured element of your loan by re-mortgaging the interest rate on the unsecured element leaps up (check your terms).
c) Paying off any loan is good news but this does not address the negative equity situation.

rachael18

Thank you

So I'm thinking, firstly pay off the unsecured loan to avoid the interest leaping up which I recall reading it does, quite significantly, then begin to make overpayments on the mortgage to get rid of negative equity??

amnblog

It's a shame - still certain pockets of the UK which are not showing capital growth since 2007.