Overpay Mortgage or Clear Credit Card Debt

hufc2002

As the title states really.


Between my wife and I we have approx. £5.5k on credit cards all at 0%.


We are wanting to move sooner rather than later and currently have £11.5k in savings.


In terms of looking for a new mortgage, are we best off clearing the CC debt or have more of a deposit. We would be looking for a 90% mortgage of around £153k for a £170k property.


Current house is approximately worth between £85-90k and owe £78.5k therefore have between £6.5-£11.5k equity.


Been overpaying current mortgage by £220 for the last 3.5 years. On lenders variable rate of 2.24%.


Should we continue to overpay or use this money instead to clear CC debt. What would be best when looking for a new mortgage?


Thanks

getmore4less

The CC won't be 0% for ever so you need to keep at least that much back in savings in case you can get new 0% credit.

Borrowing £5.5K on credit cads and calling it savings does not really work.

if you need £17k + fees if you keep the CC debt you re effectively borrowing the deposit.

has your house lost value the overpayment alone should give you nearly £9.5k equity

hufc2002

The CC debt will be paid off by Aug 2018 when the 0% rate ends.


I am not calling the CC debt savings. We have £5.5k on CC and £11.5k in bank.


Yes house has lost value, that's one of the reasons we have been overpaying to have some equity in it.

getmore4less

what's your affordability like

hufc2002

getmore4less wrote: »

what's your affordability like

Not sure exactly what you mean?

hufc2002

We have a combined income of just over £60k. This tends to increase year on year.

Only other outgoings is a car loan £177 (29 months to run) and a car PCP £389 (13 months into a 48 month deal).

Childcare is covered via vouchers (both have salary sacrifice schemes) and only other outgoings is the usual bills i.e. Energy/water/sky etc