Earn interest on a loan?

angrybarry

ok, so here's the scenario.

My local council repaired a water pipe in my garden, I'm now owe them £1000 (ridiculous I know, but thems the breaks)

Now unfortunately I don't have £1000 just kicking about, so will need to get a loan. No problem so far.

The council won't bill me until Apr 08 (roughly), my question is, should I get the £1000 loan now, stick it into a high interest savings account and earn a bit of interest on it and also start paying it off while I await the invoice from the council?

I know it's a bit of a no brainer, but just wanted to run it by folks who may have a better idea?


Any suggestions welcome thanks.
Barry.

Crabman

Surely the interest charged on the loan will be higher than the savings interest being paid, so you'll lose out by taking the loan before you have to. Can't it be paid in instalments? If you're on benefits there's a social fund loan (interest-free) which can be requested for such things.

The only other thing that comes to mind is paying it off on a 0% credit card - at the moment Halifax's credit card offers 15 months at 0% on spending - if you use that to pay the council, you'll then have 15 months to pay off the £1000 balance on the card without incurring interest - that's all I can think of at the moment though other peeps will be along with more ideas I'm sure.

http://www.moneysavingexpert.com/car...it-cards#deals

jonesMUFCforever

Do you not have insurance to claim against this sort of thing?

angrybarry

I did call the insurance company, unfortunately utility repairs by the local council aren't covered, so I'm looking for ways of softening the £1k hammering I'll get next year

jonesMUFCforever

I think you are approaching this from the wrong way - if the water pipe was on your land and it was your responsibility to fix it then the fact that the council did it for a fee is irrelevant.

Do you have legal advice cover with either your house or car insurance?
If so give them a ring to see exactly what you have to pay and what should be covered by your policy.

pcwilkins

angrybarry wrote: »

should I get the £1000 loan now, stick it into a high interest savings account and earn a bit of interest on it and also start paying it off while I await the invoice from the council?

No! Even if you get the highest rate savings possible, you will still be worse off. Nobody will lend you money at a rate lower than the highest savings rate --- otherwise everyone would take out loans!

If you can afford to start paying off a loan, then you must have some spare cash. Put the spare cash into a savings account, and by the time April 2008 comes around you might have enough.

Do the maths, it will work out cheaper.

Peter

angrybarry

Unfortunately, I live in a building of 6 flats, so it was a communal water pipe, that ran under my garden. The cost is spread over the 6 flats by the council, my share being £1k.

I think I'll get back to my home insurance company, as I believe this is technically a repair job.

Failing that, as suggested I'll just start saving some cash now and take out a smaller loan/smaller balance transfer; if the insurance company says no.

Thanks all.

rayday2

My mum had work done by the council and they just put a charge on her house that if she came to sell it it would need paying, this was at no cost to her and she is not on any benefits! I think you let them bill you, then write to say you cannot pay and then they go through the process for you.

Crabman

rayday2 wrote: »

My mum had work done by the council and they just put a charge on her house that if she came to sell it it would need paying, this was at no cost to her and she is not on any benefits! I think you let them bill you, then write to say you cannot pay and then they go through the process for you.

Does that amount secured against the house accrue interest until it is paid or is it interest-free?

rayday2

I am not sure, I know they couldnt afford to pay it off theres was major plumbing works around 6k, be worth speaking to the council and asking the procedure if you can't pay could work out cheaper if not you have only lost a phone call!

welf_man

Who is the freeholder? Or is the building commonhold?

If you are on a standard lease and are not a commonholder you need to check the lease to see whether this actually is your resposibility or down to the freeholder. Things that leaseholders can be charged for by the freeholder are quite tightly controlled so if you're in this position it would be worth getting proper advice on this.

If it's definitely your resposibility then check whether the Council will split the cost over 10 months like they do with Council Tax.

Mel.