Loans v's Mortgage

LouAD112

Wondering if you could help me? I have a loan of £5,500.00 ata rate of 8.9%

I am looking to buy my first home in the next five months (Ihave a deposit of £30,000 but I am not able to use this money to clear theloan)

I pay £175.00 per month on my loan.

I do have savings of an additional £1,000.00 which I amhappy to put towards the loan.

I am also looking to over pay my monthly payments to £275.00for the next five months

The loan at the time for my mortgage application would beapprox. £3,000.00 - £3500.00

My question is;

Should I apply for a better loan now to get a betterinterest rate, and achieve a lower monthly rate i.e. £100.00 (but still overpay at the rate of £275.00 for the next five months) or should I just continue at the originally rate/ loan?

I am looking to get the best mortgage and would a lowermonthly repayment of approx. £100.00 be more favourable?

Finally if I was going to apply for a new loan when should Ido this? i.e. in the next two month?

I am conscious of it not affecting my credit rating and Ihave read it is best not to make any credit application three months prior toapply for a mortgage.

I would be grateful for your thoughts?

Thank you.

HappyMJ

LouAD112 wrote: »

Wondering if you could help me? I have a loan of £5,500.00 ata rate of 8.9%

I am looking to buy my first home in the next five months (Ihave a deposit of £30,000 but I am not able to use this money to clear theloan)

I pay £175.00 per month on my loan.

I do have savings of an additional £1,000.00 which I amhappy to put towards the loan.

I am also looking to over pay my monthly payments to £275.00for the next five months

The loan at the time for my mortgage application would beapprox. £3,000.00 - £3500.00

My question is;

Should I apply for a better loan now to get a betterinterest rate, and achieve a lower monthly rate i.e. £100.00 (but still overpay at the rate of £275.00 for the next five months) or should I just continue at the originally rate/ loan?

I am looking to get the best mortgage and would a lowermonthly repayment of approx. £100.00 be more favourable?

Finally if I was going to apply for a new loan when should Ido this? i.e. in the next two month?

I am conscious of it not affecting my credit rating and Ihave read it is best not to make any credit application three months prior toapply for a mortgage.

I would be grateful for your thoughts?

Thank you.

I would use the £30,000 and pay off the loan. Why can't that be used to clear the loan now? Is it equity in an existing property?

If you don't pay off the loan it affects your affordability. Your income will be reduced by the payment you have to make before figuring out how much is available to make mortgage repayments with.

I would clear the loan when you buy the house. You will then qualify to borrow more money.