Clear the debt first or save towards deposit

TheGardener

I take it your wife has no objection to you using her lifetime savings to pay off your debt?

AdrianC

Forget the mortgage. It isn't even vaguely reality.

Get to the debt-free wannabe board here.

I'm only going to ask one question that might wake you up...
How much interest are you receiving on your savings?
How much interest are you paying on your debts?

pinkshoes

dashing4uu wrote: »

@ACG, 3 options to choose from, suggest me the best please!!!

Clear the debt first
Continue with the deposit and search for properties
Apply mortage on my wife's name with her deposit, when she's back into work??

Thanks
Dashing4uu

To buy a house, you need a DEPOSIT.

When you have a DEBT, you cannot possibly have a deposit because you have no money.

Your ONLY option is to pay off ALL your debts first, THEN save a deposit.

Your wife going back to work is a very sensible idea.

KRB2725

Pay off your loan with the savings.

Wife gets a job.

Clear C/C debt

Save your deposit.

robatwork

If you're paying a debt of £6k on a card then chances are it's at a huge interest rate compared to what your wife is earning in interest on her £10k.

To me (not to some) being married means you're in it together. No prenup, no "his" and "hers" but all is "ours". That goes for money. So to me, you don't have savings and your wife's money should go immediately to paying off your (joint) debt, as the marriage is in debit, not credit financially. It's like your right hand being cut and bleeding, but your left hand holding a plaster but not putting it on your right hand just in case it gets a cut.

Pool your money and start from there.

sheff6107

You need the deposit but you'll probably have trouble getting the amount you need with the debt.

I'd spend £5k clearing most of the credit cards (and try to save another £1k to get rid of the rest.)

Your loan is a fixed monthly payment and easier for you and the mortgage company to factor into monthly outgoings.

always_sunny

you are better to clear the debt first and then save, especially when the debt is significant (on your annual wage).

What do you do in London? If you're in a job that can be easily be ported elsewhere, you might clear half of the debt and then move from London immediately and start planning to buy a house.
When you move you will need 6 months or so before you can apply for a mortgage.

Living (as a family) on your wage in London you'll always be treading water, your priority should be to get out of it.

Pixie5740

TheGardener wrote: »

I take it your wife has no objection to you using her lifetime savings to pay off your debt?

I suppose that depends how the debt was accrued. What if the debt was built up due to the household income reducing (wife no longer working) but the household expenditure remained the same?

The_Logans

If I were in your shoes I would:
1 - Wife try to get a job
2 - clear credit cards


3 - move to midlands (assuming you have a job to go to there)
4 - wife find job in midlands while you rent to begin with and work on clearing your loan
5 - once you are both working and you have reduced your loan somewhat, it's time to start looking for a house to buy.


There is no quick fix for this, you do need to work on increasing your income and reducing your debt before you contemplate taking on a mortgage.


Good luck.


PS I live in Shropshire, much prefer it to living in the big smoke! (I'm from Glasgow). West Mids is a good choice

VintageHistorian

You may find that Option #3 involves you waiting for months anyway, the vast majority of lenders will want you to have got through the probation period at work at the very least (so that's around 3 to 6 months, but some places have a year!), and your wife will need to show a minimum of 3 payslips as proof of earnings. Her first payslip will no doubt be "wrong" due to emergency tax or 6 weeks worth of wages being paid, depending on when she starts vs. when payroll kicks in for her, so you'd need to wait until her second payslip to check everything's worked out, then start counting them towards the application.

I agree with AdrianC, you need to pop over to the Debt-free Wannabe board and get some advice from the people there about clearing your debt. Post up an SOA so you can see where your money is going, and then see what people suggest about ways to cut down your outgoings.

I have to wonder why you're asking us what to do with your wife's savings? Why aren't you asking her? The pair of you need to be sitting down together with all the figures for your debts and her savings, and the potential mortgage you'd be looking to get. She may want to keep the money as a rainy day fund, she may have earmarked it for the children's future university fees, or she may be perfectly happy using it to clear the debt (a debt I assume you've built up during your time as a married couple) and give you both a clear slate to work from.

However that clear slate will only stay clear if you get your spending under control, and that will be what the DFW board will help you with.