Having debts while saving a house deposit??

FlyingFigLeaf

I'm currently saving hard and very focused on trying to get the funds saved to make a house deposit so I can get on the housing ladder.

I have about 6K saved so far but also have about 6K of debt on a credit card (currently on a 0% offer). I know normally the best advice is to always pay off debts but I'm assuming when saving for a house deposit (which honestly I'm desperate to gather up as my current housing situation is not good) I should continue to pay the minimum monthly on the debt and keep growing my deposit amount asap.

Am I right to continue as I am or should I wipe out the CC debt and start saving again from zero? If I continue as I am I think I have a chance of being ready to look at houses in a year or so, but if I wipe out the debt it'll be at least two years before I can look at houses and my mental health might not tolerate that.

All advice appreciated!

elsien

 You could always address the reason for your credit card debt - I would pay more than the minimum amount to get it down as long as you’re not then just adding to it by using it to buy other things. 

While  it’s on 0% your money is better off in a savings account for now, but in terms of future affordability where did the debt come from and has that overspend now ceased? And when does your interest-free period end?

Brie

I'd say put a set amount each month to the card to get it edging down a little faster and makes it look less like you're paying the absolute minimum.  Then use some of your savings to clear the final bit.  Then start saving even harder.  Wait a while (year?) and then start looking at mortgages if you have a decent deposit by then.  

If you go to the debt free board and fill out the SOA on one of the top stickies that will help you have a good look at your budget to see what else might be trimmed to help with your saving plan.

Myci85

It may depend on whether once you've saved your deposit you will need to maximise your borrowing potential, or if you'd actually be able to borrow more than you need. Having debts will reduce how much you are able to borrow on a mortgage. 
Have you spoken to a broker yet? We spoke to one before we were quite ready to apply for a mortgage, and he gave us really good advice of what we needed to do to get ourselves in the best place to apply when the time came. He didn't charge for this advice, but we of course went back to him when we were then ready. A broker will be able to look at figures and borrowing amounts etc for you which may help you decide which to prioritise. 

AliceBanned

As previous post I agree it would be good for you to speak to a broker. I would also recommend you start to repay the credit cards as depending on the cost of housing in your area, and your salary, you may need to pay off the card before completing on a house purchase. You say you will be ready in a year but the process of purchasing can be slow, as long as 8-9 months if you are in a chain.
 When I bought my flat I had to have zero balance on my credit cards but the lender (via broker who can negotiate for you) agreed I could pay my cards off by completion and not at the time of application, because like you I was saving everything I had for a deposit, but ultimately had to save for the card repayments too. 

Also in what way is your housing so bad (only if you want to share this on here) and can any changes be made there in the meantime? Also sounds like you have a plan but this takes a while for most of us so keep going and good luck! 

jimjames

Definitely worth making sure you can clear the 0% balance before it starts being charged at full rate. In the meantime maximise your interest with accounts paying 5% so you boost your deposit as much as you can. 

So yes I would continue as you are by paying as little as possible of the 0% to maximise your deposit and interest earned.