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Pay off Mortgage First or Credit Cards First?
scottishlass1979
Posts: 16 Forumite
Hello
Our mortgage term ends in six months and we will be able to pay a lump sum off the balance without any penalties.
We have £20,000 in savings. We also have £10,000 on 0% credit cards which will run for another 18 months.
We are self-employed, and our 'loan affordability' is weak. Paying off the credit cards should help improve our affordability, as we will have no debt.
We need a brand new mortgage in about 18 months, and as our affordability is weak, then we need to do all we can to help our application.
But what is the best option? Pay off the mortgage and save a lot in interest payments? Or pay off the credit cards to improve our affordability?
All perspectives appreciated, and apologies for the long-winded post!
SL
Our mortgage term ends in six months and we will be able to pay a lump sum off the balance without any penalties.
We have £20,000 in savings. We also have £10,000 on 0% credit cards which will run for another 18 months.
We are self-employed, and our 'loan affordability' is weak. Paying off the credit cards should help improve our affordability, as we will have no debt.
We need a brand new mortgage in about 18 months, and as our affordability is weak, then we need to do all we can to help our application.
But what is the best option? Pay off the mortgage and save a lot in interest payments? Or pay off the credit cards to improve our affordability?
All perspectives appreciated, and apologies for the long-winded post!
SL
0
Comments
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Hi scottishlass1979 and welcome to the forum
If it were me, I would pay off the debt that saves the most money through reduced interest payments...I work within the voluntary sector, supporting vulnerable people to rebuild their lives.
I love my job
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I'd focus on the mortage. I don't think there is much difference in affordability if you have £20k savings with £10k CC debt vs £10k savings and £0 CC debt0
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scottishlass1979 wrote: »We are self-employed, and our 'loan affordability' is weak.
We need a brand new mortgage in about 18 months, and as our affordability is weak, then we need to do all we can to help our application.
But what is the best option?
Remortgage for a better deal with your current lender. When you remortgage with the current lender, unlike remortgaging with a new lender they don't have to do any affordability tests and there are no fees to pay.This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0 -
Who is telling you your affordability is weak?0
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Who is telling you your affordability is weak?
the credit report on here lol, and also our bank. which is a pain as we have never missed a payment ever. our credit rating is practically perfect.
it's a drawback of being self-employed, we work from home and our accountant can whittle our earnings right down so we pay less income tax. but this causes problems when applying for a mortgage0
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