Where do i prioritise? Want to buy, no deposit, & debts.

nicwantstobuy

Hi All
Hope someone can give me some guidance. I will hopefully be divorced next year. Always rented with exh. Ive got 13100 loan (think its on 5 % this is amount owed inc interest as seen on banking app) consolidated debts before marriage ended. 6500 total on 2 x 0% credit cards. 56 in a lifetime isa. I earn 41723. Just stopped paying childcare so i have an extra 200 - 250 per month. 
I would really like to buy a home, after divorce.
My question is - where do i prioritise the extra money - debt repayment (if so loan or cards?) Or saving for a deposit?
Im 39 if that makes any difference!
Thank you
N :-)

[Deleted User]

Pay off the highest rate debt.

Then you can save more quickly for the deposit.

[Deleted User]

My focus would be repaying the debts as a, debt-free increases mortgage chances   b, better financially overall. I believe you can only save in a LISA for 11 more years so after debts that should be a focus as that can (I think) be used as a house deposit, hope that helps.

[Deleted User]

On whether loan or cards, I’d try loan first due to higher interest (if any repayment penalties then up to the limit) any spare cash should be used on the card with shortest 0% period.

nicwantstobuy

Thanks both. Are we saying pay loan off first? This is 5 more years - i'll be 44 by then with no deposit ...

ryanm8655

Might be worth filling out an SOA.

How long is left on the loan?

How long is left on the 0% deals?

Other thing to bear in mind on the LISA is the annual 25% bonus. So that’s likely to be better than the rate you’re paying on the loan. And depending on when the 0% deals end it might be better to hold off on those too. But if you pay into your LISA now then you can’t withdraw without substantial penalty.

I’m in a semi-similar situation whereby all of
my debt will be on 0% next month and also have a LISA. I’ll be focussing on the debt though. Then I’ll see how much I can save before April next year and pay that in as a lump sum to maximise the 25% bonus within my means. At the moment I pay in a token 5er a week.

nicwantstobuy

Thank you - whats a SOA?

Galloglass

Its a shorthand for Statement of Accounts or what you earn, what you spend and what are your debts. SOA is shorter

https://www.lemonfool.co.uk/financecalculators/soa.php

AnxiousTheElephant

nicwantstobuy said:

Thanks both. Are we saying pay loan off first? This is 5 more years - i'll be 44 by then with no deposit ...

I think they were suggesting to throw your spare cash at the loan to finish it earlier e.g. the extra your saving in childcare (200-250) may help you pay your loan off in 2 years rather than 5

nicwantstobuy

Ah sorry that makes sense now! Thank you all 

[Deleted User]

Prioritize spare cash on loan to clear quicker is what I meant.