Debt, new mortgage and endowment maturing

skates86

I’m looking for some advice. 
We currently own a house with a mortgage of 126000. We have about 6000 deposit in it, this was borrowed from my mum and we still need to pay back 4000 of it. I have credit card debt of 4500, and 6000 although 4000 of this is due to be paid back (had to lend money for rescue flights). I also have graduate overdraft of 2000. The credit cards are interest free as is the overdraft. Debt is largely due to house issues (we bought a stupid house) and paying off tuition fees from university. My partner has loan for 8000, and cc debt of 3000 (interest free) but plans to clear that soon. I earn 32000 pa and he earns 21000 pa. I have a with profits endowment that is due to mature next month worth 42000 and plan to pay my mum back first. Are we better to clear our debts, invest for the future or use some of my endowment for a deposit. Should I keep my endowment reinvested due to the current economic crisis? We are thinking of moving and would like to get a bigger house possibly. Any advice greatly appreciated. It’s all a bit overwhelming at the moment! 

dunstonh

 Are we better to clear our debts, invest for the future or use some of my endowment for a deposit.

Short term, expensive debts should be paid off before investing.

Long term cheap debts will largely depend on your situation. (just for example. if your mortgage is 2% interest rate and your pension is returning 7% it would be daft to stop paying into your pension to clear the mortgage).

Long term expensive debts should be paid off before investing.  

 Should I keep my endowment reinvested due to the current economic crisis?

You assess the situation at the time.  What else is going on doesn't really matter that much,

e.g. if the debts are 2% interest and affordable, then you may not want to clear them.  If they are 15% interest and affordable, you should clear them if the investment is likely to average around 7%. (no point paying 15% in interest and only getting back 7%).

Affordability comes into play as well.   If the monthly cost is hitting you hard then reducing that will help.  

[Deleted User]

Personally Id clear the lot and start again but ONLY if you cut up all the cards and dont be tempted to restart all those debts. All the money you are using to pay the debt monthly payments should all be saved towards a deposit. 

MovingForwards

With £27k of debt, I would be clearing that first, in case you go down to one income.

Keep £5k in ready access money, then save the rest.

Thrugelmir

Clear the debt and start afresh. You need to learn your manage your personal finances better rather than simply taking on more debt. Resulting in being in exactly the same situation in a few years time. 

FtbDreaming

Deffo pay off all of your debts then build up your finances with what you save from debt repayments. You’ll still have a few grand to put towards the deposit for a mortgage and the £6k equity when you sell the house you’re in. 

I had £4,000 in debts that I paid off from 2017 and now apart from normal bills all my money is mine and it feels great!