Paying off debt vs. Saving for a deposit

adam6172

I was wondering if anyone could offer some advice?

I'm 35, and have just started saving for a mortgage deposit, as a first time buyer.

I have about £7000 in debts, and am thinking about getting a loan to consolidate them and pay it off over seven years, at about £100 a month.

I know this is not the cheapest way to do it, but I'm keen to get on the property ladder before I'm 40. If I focus on paying off the debt before saving for a deposit, I figure that'll take me too long.

I'm confident I can get a deposit together within about three years - but will the fact that I'm planning to be paying off this £100 a month until I'm 42 make it significantly harder to get a mortgage?

kingstreet

No. It will simply mean you will be able to borrow less as that £100 a month will be part of a lender's affordability assessment.

Try different lenders' calculators with and without it to see its impact.

Car1980

On the other hand, taking out a loan now will prevent you having to do so nearer the time of your mortgage application.

It's not unusual to have a loan for paying off the car and a single loan might be viewed more favourably than having £7k spread over a load of credit cards.

You also have the option of paying it back early in a couple of years if you get a pay rise for example.