To buy a house or pay off loan

RED2015_2

Hi

I am looking for some advice, I have recently been left around £10k and was thinking of using this money to get my first house through help to buy.

I do also have a loan with £10k left on it paying off around £300 a month (so a number of year left on it), the question is should I use the money I was left to pay of my debt or am I better off going ahead with a house purchase?

I really cant decide at the moment as to the best thing to do for my family and I.

Thanks for any advice

Pixie5740

It depends on your income and other expenditure. If you can ahead and by a property those £300 a month loan repayments will be taken into account when calculating your affordability.


Is this £10k your only savings? In other words do you have anything left at the end of the month to save?

Lord_Baltimore

Pay off the loan. A house will bring you other debt as well as the mortgage.

Your best chance to get straight is now. The £10k is a windfall that you've never had so you won't miss it but you will come to appreciate its benefit in future when you and your family have a house but aren't chewing your nails worrying about the bills.

RED2015_2

Thanks for the reply

It is my only current savings, however I could put a little more aside each month.

I can afford the repayments on a mortgage of up to around £170k while still paying my loan but would make things a little tight. Just not sure if I would be better off paying the loan off and then saving up for a few years for a deposit or taking the jump now while I have money to put down for a deposit.

Its the first time in my life I have ever had a decent lump sum so I want to make sure I use it in the best way.

RED2015_2

Thanks Lord Baltimore

I do sway more to agree with you as the extra £300 a month would make a big difference to most peoples lives. I guess it is the fact I have never had a lump sum of money before and pressures around you say buy a house.

Pixie5740

If the £10k is all the savings you've got then I agree that you should use it to pay off the loan. Then start saving for a deposit.