Credit card / personal loan help

Haphazardsaver

Hiya, 
In my younger years I racked up quite a bit of debt on credit cards - and got into a cycle of paying off the min while still using the cards. 

As a result they accounts were closed but I’m now in a much better position paying off more than the min each month / saving as well. 

But the question is would it better to get a personal loan to repay in full? And then re pay off the loan? 

I’m in a position where next year I would be looking to get a mortgage so any advice would be appreciated. 

MorningcoffeeIV

What are the comparable rates?  

Haphazardsaver

The rates would be similar - about a 1% saving on the personal loan. 

But I wasn’t sure if having a closed / suspended credit card is worse?

eskbanker

Haphazardsaver said:

I’m now in a much better position paying off more than the min each month / saving as well. 

But the question is would it better to get a personal loan to repay in full? And then re pay off the loan? 

I’m in a position where next year I would be looking to get a mortgage so any advice would be appreciated. 

How long will it take you to repay the cards, i.e. is it realistic to expect to do so prior to getting a mortgage, whether directly or via a loan?

Have you had any informal discussions with mortgage brokers to sense-check your aspirations?

Probably also worth checking your credit files to see whether they accurately reflect your situation:

https://www.moneysavingexpert.com/loans/check-free-credit-report/

Haphazardsaver

To pay off the cards will be about 3 years - so only way to pay off ahead would be with a loan. 

I do check my credit reports and all look accurate. 

No discussions yet but will look into doing that. 

Haphazardsaver

I should say the 3 years is based on budgeting - so paying a set amount each month on the cards,  food, rent currently / mortgage payments potentially, travel etc 

eskbanker

Have you investigated the actual viability of taking out a suitably sized loan to pay off credit cards?  At the point where you'd do this, you're effectively doubling your debt, even though you'd see that as a temporary measure, so lenders may not be amenable, either to the loan amount or its purpose.

To return to your original question, I'm not convinced that doing so would be worthwhile anyway, as the data about the conduct of the cards will still be visible on your credit files, i.e. using a loan to pay them off doesn't wipe them from the records.

Haphazardsaver

I’ve done soft search’s via Experian - thank you for the advice though, makes sense. 

Just wanted to check if there was a preference as the rate between the two wasn’t that different it wouldn’t be a big saving on investment.

Thank you

th081

Haphazardsaver said:

I’ve done soft search’s via Experian - thank you for the advice though, makes sense. 

Just wanted to check if there was a preference as the rate between the two wasn’t that different it wouldn’t be a big saving on investment.

Thank you

Are zero deals closed to you. If they are the chance of getting a loan must be low 

daivid

Haphazardsaver said:

Hiya, 
In my younger years I racked up quite a bit of debt on credit cards - and got into a cycle of paying off the min while still using the cards. 

As a result they accounts were closed but I’m now in a much better position paying off more than the min each month / saving as well. 

But the question is would it better to get a personal loan to repay in full? And then re pay off the loan? 

I’m in a position where next year I would be looking to get a mortgage so any advice would be appreciated. 

So are you putting aside money into savings whilst still carrying over CC balances? Unless your CC are at 0% this is costing you money. Paying the maximum CC payment each month (keeping a small contingency for emergencies) will be best in the long run.

badmemory

A consolidation loan is rarely a good idea.  Also the lender will look at it as additional (double) the money already borrowed.