Loan repayments - snowballing advice

Andyjflet

peteuk said:

enthusiasticsaver said:

I would definitely pay off that GB loan then as it saves you so much in interest.  Realistically are you going to be in a position to house hunt any time soon? How high a deposit do you need and how much have you got?  Is it in a LISA or similar account specifically for buying a house? If you got rid of the debt you would have an additional £570 a month approx to replenish your savings and if you have debt any mortgage would reduce the amount they would lend you anyway. Normally you would get rid of the debt first and build up emergency savings then house deposit. 

We currently have £46K in savings, which provides us with a 10% deposit on £300K house.  I realise I can phone up tomorrow and clear all three loans, however I don't want to dent that pot too much.  Having spoken to a mortgage advisor we are gong to hopefully add to the pot and start looking at houses in the new year.  Hence why I don't want to dent the pot too much and equally pay £4K to GB gives us little time to recoup the money before we start looking for a house.  Due to age I am already looking at a 19 year mortgage, don't want to be paying a mortgage at 70.

Savings is in a normal savings account, as received only recently. 

Personally I think its madness that you arent clearing this off, for a number of reasons.

1. A lender will take into consideration your debts and deduct from loan amount.
2. The peace of mind and freedom of your income when debt free.
3. The interest.
4. The ability to be able to save a large proportion of your new found spare income to build the deposit.

Please just get it done, what an opportunity. 

EssexHebridean

“ the next loan may be for a replacement car in a few years time”

This is why I’m worried. If you’re talking about the replacement car being needed “in a few years” then as soon as you have your finances sorted out now - ideally by the time you start paying a mortgage - start also setting aside a sum of money each month towards this proposed purchase. Make your current vehicles last as long as you can also - modern cars, well maintained and sensibly driven, will pretty much go on mechanically forever. It is a massive concern that in the situation you are now, already being limited to using high-risk lenders, you’re already thinking about “the next loan” though. Make the aspiration to save for the things you need and then purchase them, not purchase them using finance, so paying more and also having to pay them off over the following years. 

enthusiasticsaver

I am glad you are paying the loans off as some of those interest rates are awful.  Same goes for the high interest credit cards.  Whilst I understand not wanting to dip into the house deposit it really makes no financial sense not to clear the high interest debts as they are costing you a fortune.  Make sure you direct the payments you were making to savings to replenish them rather than upping spending. 

peteuk

Update - 

Thanks for everyone's advice and thoughts on this matter.  In total the cost was £6270 (£906, £1222 and £4142) which saved us £2958. 

Andyjflet

peteuk said:

Update - 

Thanks for everyone's advice and thoughts on this matter.  In total the cost was £6270 (£906, £1222 and £4142) which saved us £2958. 

peteuk said:

Update - 

Thanks for everyone's advice and thoughts on this matter.  In total the cost was £6270 (£906, £1222 and £4142) which saved us £2958. 

Great news, so you cleared it all and saved nearly £3k!! brilliant.