gax's DFW Diary - Back here again

gax23

Hi all,

I think it's probably time I started my own DFW diary!

First things first, I don't have a regular income as I run my own business. However, the business is growing, so the most important thing is that my income will be getting bigger! As a (very) rough estimate, it works out at about 16k a year right now.

Debts
Credit Card #1: £217.95 @ 24.9%
Credit Card #2: £789.93 @ 29.9%
Total Credit Card Debt: £1,007.88

Loan (NatWest): £12,746.36 (including interest for just under 5 years)
Total Debt: £13,754.24

My regular bills and outgoings now total £500 a month. This is just the absolute essentials (bills). It did look a lot worse than this. I have just paid off my two highest interest cards (a total of £1,100).

My short term target is to clear my credit cards, and I'm currently paying around £218 a month off my loan. My question is this: Do I save to pay off the loan (a LOT of saving!) or do I keep the loan running til the end of the term to enable me to save for moving out? I'd like to be in my own place within the next two years and it's unlikely that I'll be able to do both unless my business really takes off.

What would you do?

Snaggles

Hiya :wave:

There's nothing to say you wont get a mortgage if you have a loan, but bear in mind in will be taken into account when they are calculating your affordability to make the repayments on the mortgage.

What is the APR on your loan?

Why not post your SOA and we can see if we can help you reduce your monthly outgoings so there is more money available to throw at the debts. (see Help for First Time Posters for a template)

How long have you been running your own business for? High street lenders are often twitchy about lending to the self employed. As a very rough guide, you would probably need to be able to provide 3 years accounts with net profits (not turnover) that are sufficient to support the level of mortgage you are asking for. You would probably find lenders who would be more lenient, but they may charge a higher APR.

Good luck with it, and keep posting, there's loads of info and support to be had on these forums.

gax23

Snaggles wrote: »

Hiya :wave:

There's nothing to say you wont get a mortgage if you have a loan, but bear in mind in will be taken into account when they are calculating your affordability to make the repayments on the mortgage.

What is the APR on your loan?

Why not post your SOA and we can see if we can help you reduce your monthly outgoings so there is more money available to throw at the debts. (see Help for First Time Posters for a template)

How long have you been running your own business for? High street lenders are often twitchy about lending to the self employed. As a very rough guide, you would probably need to be able to provide 3 years accounts with net profits (not turnover) that are sufficient to support the level of mortgage you are asking for. You would probably find lenders who would be more lenient, but they may charge a higher APR.

Good luck with it, and keep posting, there's loads of info and support to be had on these forums.

Hi, thanks for your reply.

The question wasn't about eligibility for a mortgage, but rather as to whether I should be saving to pay off the loan or saving for a house. Can't imagine I'll be able to afford to do both.

I've been running my business since early last year, but went full-time with it around November time. It's a limited company so I'm not technically self-employed anyway.

Snaggles

gax23 wrote: »

Hi, thanks for your reply.
The question wasn't about eligibility for a mortgage, but rather as to whether I should be saving to pay off the loan or saving for a house. Can't imagine I'll be able to afford to do both.

It was relevant to your question, and I thought it would help you to make the decision. Also, as you had no other replies, it bumped it back to the top for you.

Although it is a limited company, from a bank's perspective you would be classed as self employed (I'm a mortgage underwriter), and the income taken into account would most likely be your share of the net profits, plus any directors remuneration.

I'll get me coat :rolleyes:

gax23

Snaggles wrote: »

It was relevant to your question, and I thought it would help you to make the decision. Also, as you had no other replies, it bumped it back to the top for you.

Although it is a limited company, from a bank's perspective you would be classed as self employed (I'm a mortgage underwriter), and the income taken into account would most likely be your share of the net profits, plus any directors remuneration.

I'll get me coat :rolleyes:

Eh? Didn't mean to cause any offence - was just making it clearer as to what I meant in the first post as I didn't explain it properly.

When I've been doing bank stuff, and HMRC stuff, they always class it as me being an employee of the company. They both actually said that it'd be wrong to put me down as self-employed, because I'm not - the company is a separate legal entity.

Sorry if you thought I was being weird - was just expanding on my original post as I thought you'd misunderstood some of it.

postingalwaysposting

gax, we cant answer clearly without a detailed soa. You say you pay £218 on the loan and £500 other expenses = total of £718 per month. However what do you take hone? What could you save/pay off you loan as 'extra'?

In my opinion if you will only be saving for either of the items only £200 per month extra then i would save if firstly for a deposit on a house (which you would need anyways) then throw it at your debt. Either way you will need a mortgage even if you had cleared the loan it still sits on your credit file for 6 years so it could still influence the bank desision. If you dont save for a deposit on your house and pay it all off your debt you may need to apply for a 100% mortgage which isnt always a good idea :rolleyes:

gax23

Hi,

Sorry - The £500 includes the £218 repayment. Was a bit early when I wrote that! As I mentioned, my take-home varies due to running a relatively young business. Here's all my outgoings:-

Rent - £160
Phone - £35
Loan - £216.04
Car Insurance - £58.67
Lottery DD - £9
CC #1 - £5 (minimum payment)
CC #2 - £24 (minimum payment)

Total of £507.71.

Thanks for the advice about the mortgage - didn't realise loans sit on your record for six years, so will save for the house instead!

postingalwaysposting

gax23 wrote: »

Hi,

Sorry - The £500 includes the £218 repayment. Was a bit early when I wrote that! As I mentioned, my take-home varies due to running a relatively young business. Here's all my outgoings:-

Rent - £160
Phone - £35
Loan - £216.04
Car Insurance - £58.67
Lottery DD - £9
CC #1 - £5 (minimum payment)
CC #2 - £24 (minimum payment)

Total of £507.71.

Thanks for the advice about the mortgage - didn't realise loans sit on your record for six years, so will save for the house instead!

gax there are a few things you havent included in the soa like ~ car tax, petrol, car repairs, mot, mobile, food (even if its just snacks) etc. Any credit you have had in the last 6 years will still be on your credit record, even if it is settled. Thats why its so hard sometimes for people to get credit even when they have nothing outstanding.

Good luck with the busniess and the saving for a house :T

gax23

postingalwaysposting wrote: »

gax there are a few things you havent included in the soa like ~ car tax, petrol, car repairs, mot, mobile, food (even if its just snacks) etc. Any credit you have had in the last 6 years will still be on your credit record, even if it is settled. Thats why its so hard sometimes for people to get credit even when they have nothing outstanding.

Good luck with the busniess and the saving for a house :T

Thanks for your advice! Car tax isn't due for another year (will be CC-free by then) as I just bought it with a year's tax on it. I only use it for business meetings so petrol goes through the business. Still got a couple of years warranty too, so shouldn't have repair bills. Mobile was the phone bill - landline is business only. Food is incorporated in rent as I'm still living at home, so it's sort of a package deal!

Surprised about the six year thing. Looks like I'll have a way to go, then. Still, by the time I apply for my mortgage, I'll be a multi-millionaire, obviously :D

gax23

THE £67.49 CHALLENGE

Right, I have £67.49 in cash (£7.49 of which is in coppers!!) so will see how long this lasts me. Mainly, it's motivation for me not to visit a cash machine!

Plan for 24th Jan
Shouldn't be spending any today, as I'm working all day and going to watch a film with the girlfriend tonight instead of going to the local beer festival. I'm hating this already...