What to pay?

Moneygrabber11

Hi everyone
Im looking for a bit of advice on how to pay some things, how much to pay and when, because im not sure what will have the most effect on the mortgage next year.

I have £15970 in a basic savings account, not earning much interest, and im adding to this by about 200-300 per month from my income.

I have a loan, taken out this year for a new car. Current balance £14467. Apr 3.6% monthly payment £358.

I have a credit card balance of £5742. Currently 0% until december 2017 and paying the minimum each month of 1%

My mortgage is £85k at 3.49% on a fixed deal until august 2017. I can only overpay by £1000 per calendar year while in the deal. The house is currently worth approx £100k-£105k.

I have a very good credit file, no late/missed payments or defaults, no ccjs or payday loans, on the electoral role and a few long term credit accounts with good credit limits.

My questions are what should i use the savings to pay? Do i pay off the credit card or the loan? Should i overpay the mortgage as soon as my deal ends? Would the credit card balance affect the remortgage?

Wimbrel

I'd pay the car off and then build an emergency fund back up before chucking the £358 per month at the credit card. Then when that's gone pay the max off your mortgage each year.

AllyMac

I'd be looking at that CC - looks like low priority now because it's 0%, but during this 0% period, you're hardly touching it.
What's your plan for Dec 2017 when the rate jumps?
So even though it's the interest free part of your list, I'd probably put my £300 a month savings to that - £3600 out of £5800, done.
Then you only need to take a little over £2K out of savings next Dec and the CC - and its new high rate - is GONE! It will also increase your disposable income for remortgage.

That may not be the best thing in terms of saving money, it's just how I would do it. It's psychological as well - I would rather become someone who doesn't turn to CCs - so that would be part of my reason.

I'd also post an SOA here - it's possible that there are ways you can save money each month so you have even more options!

MrsTinks

Paying the car off depends on how you have financed it and if you intend on keeping it "forever". Cars depreciate - fact of life. If you want to keep it for life then paying it off makes sense. If in 2-3 years time you will be changing and you have pcp the. It makes sense to pay the absolute minimum towards it and then doing a voluntary surrender - that way the finance company takes on the negative equity.
Given 2-3 years is a long time I would personally pay the card off or keep this in savings either till Nov17 or until you can remortgage and reduce your mortgage ��

Shakin_Steve

Moneygrabber11 wrote: »

Hi everyone
Im looking for a bit of advice on how to pay some things, how much to pay and when, because im not sure what will have the most effect on the mortgage next year.

I have £15970 in a basic savings account, not earning much interest, and im adding to this by about 200-300 per month from my income.

I have a loan, taken out this year for a new car. Current balance £14467. Apr 3.6% monthly payment £358.

I have a credit card balance of £5742. Currently 0% until december 2017 and paying the minimum each month of 1%

My mortgage is £85k at 3.49% on a fixed deal until august 2017. I can only overpay by £1000 per calendar year while in the deal. The house is currently worth approx £100k-£105k.

I have a very good credit file, no late/missed payments or defaults, no ccjs or payday loans, on the electoral role and a few long term credit accounts with good credit limits.

My questions are what should i use the savings to pay? Do i pay off the credit card or the loan? Should i overpay the mortgage as soon as my deal ends? Would the credit card balance affect the remortgage?

You don't say in your post whether the car loan is flat rate. If it is, you still have to pay the interest on it even if you settle early. If it isn't, and you will just have to pay a months interest to settle it, that's where I'd go. I really can't understand why you took out a high interest(car loans usually are) when you had the money to pay for your car in the bank unless, of course, you put down a big deposit.
I'd start paying more than the minimum payment on the CC (i.e., the £358 you not now paying on the car loan) December 2017 will come around very quickly and the option to switch to another 0% balance transfer just might not be there.
If the car is paid off and the CC down to a reasonable level by August, you can start overpaying your mortgage.


Sorry, just noticed your car loan is 3.6% apr, not very high. Still, would be nice, for you, to see it gone.

Katzen

^^what the others said about the car^^
Mortgage interest rates improve as your loan to value ratio decreases. You will get a better rate if you can get that down to 80% in time for your remortgage. You'll get better still if you can get down to 70%. You could do that if you chucked your entire savings at it but that leaves you with no way to pay your CC in Dec or an emergency fund.
I would download a mortgage calculator spreadsheet (think there's one as a sticky in the mortgage board) and see how much you need to have saved by the time you've made all possible payments by August to reach either 80 or 70% LTV. Keep that to one side, plus enough to clear the CC and also enough to have a decent emergency fund (I believe 3months wages is the yltimate aim but as a starting point look at maybe 3months essential bills)