What to pay first?

princess295

Hello, thanks for reading

Ive been able to secure a good contract thats initially for 3 months with potential to increase for longer, the contract has meant ive had to set up ltd company but got a fab accountant and saving every week towards my tax bill at the end of the year.

The contract had meant a big increase in pay so i have about £500 a week to put towards debts im just not sure which one to overpay first.
I have a mortgage of 63000 with 21 years left @302 a month
10000 loan @380 a month
8000 loan @145
4000 credit card @0% until 2021 so not worried about that one.
My initial thoughts were to overpay the mortgage as i can overpay 10%a year and its due for remortgage next July but then i thought wouldn't it be better to overpay the 10000 loan so now im not sure what to do.
Ant suggestions would be welcomed

jbryce

Do the loans allow overpayment? They will always allow early settlement, but that means paying off the whole lot in one go.

kuratowski

What are the interest rates on the loans? And do they both allow overpayments / early payments - if so, what fees are payable?

Bigger picture, I assume your accountant has given you advice on tax treatment of a ltd company etc. So you should be aware you are not getting any pension contributions and probably no other benefits such as sick pay etc, so some sort of longer term financial planning would be very wise. What is best to do first very much depends on the interest rates on your debt.

princess295

I can't remember the exact rates I think they are, 10000 18% 8000 12% and mortgage 2%. Im aware there's no benefit however i have paid into pension with nhs and local authority for 10 years which ive now stopped so i aim to clear as much debt as possible this year before going back to permanent employment. Im 30 with no partner or kids so want to get in best financial state i can whilst im earning more.

princess295

Both loans allow overpayments

Trentenders

In almost all circumstances the18% one should be the first that you tackle.

thegreenone

Don't pay anything for the next three months until you know you have permanent employment/long term contract. Save the 6k and once you know, I would say pay 5k to the larger loan and leave yourself 1k for emergencies. If you are still earning good money when it comes to remortgaging, reduce the term not the repayments. Good luck.

princess295

Thanks everyone i appreciate your suggestions

enthusiasticsaver

The most expensive debt first. 18% is really high.