What do i do? 26 February 2008 at 1:59PM in Mortgage-free wannabe 10 replies 839 views

sunshine_shell

I currently have a mortgage on my flat and my boyfriend moved in in december, we are looking to buy our own place and we are saving but we do have some extra cash so do we........

throw it at the mortgage we (i) have?

or save it to put on our deposit for the new house?

We want to make quite a big jump house price and size wise and we both earn 27K+ each so we know that we could afford a biggish mortgage

Any advice would be greatly recieved:beer:

Shell

setmefree2

Hi

Assumimg this is money over and above your "rainy" day or emergency fund it will depend on the interest rate on your mortgage and on what ever savings rate you can get...do you have a cash ISA ?

SMF2

Di-Dough

Dont forget all the things you have to pay out when you move - Stamp Duty, Solicitors fees, Estate Agents etc .... If you dont already have that covered then it might be a good idea to keep some money for these

sunshine_shell

Yeha i have an isa i think i will save the money for all those scary extras that we'll have to pay! It feels like we're never gonna get moving!!

ailuro2

Looking at your signature I'd ask what interest rate you'repaying on that loan, how much it would cost to repay it early, as the interest on it is likely to be higher than your mortgage.

Always pay off the highest interest debt first.

Jonbvn

As per the previous poster, it is nearly always better to pay-off unsecured debts before you start saving and/or overpaying the mortgage. The only cases where this may not be true are student loans and 0% stoozed cash.

sunshine_shell

I can't overpay on the loan or i would be chucking my spare money at it, i wish to god i never took the dam thing out and i should have just paid the cards off - think they would have been paid off quicker and the extra money would take ages to save up and pay off the loan but the good thing is that i don#'t have the credit cards anymore. so that is the only debt i have. Oooo it makes me so cross and upset thinking that i will have that loan for the next 4 1/2 years!

Trying_to_be_good

Whilst you might be able to cope with a big mortgage, you will need a sizeable deposit to get a good mortgage rate - it's been well reported that Nationwide's best rates are now only available if you have a 25% deposit, so make sure your figures are realistic.

Also check how much the early repayment charge/penalty is on the loan - it might be worth paying that anyway to get your credit rating improved, by being otherwise debt-free.

sunshine_shell

Yeah but i don't have 8k to pay off the loan. It would take me the term of the loan to save the 8k lol i just wish i could make overpayments on it.

Between us we should have a 30k deposit which i think is quite good i just wnat to get rid of the loan and i know it will be there

getmore4less

I currently have a mortgage on my flat and my boyfriend moved in in december, we are looking to buy our own place

If you plan to sell the flat when you move then it make little difference if you pay down the mortgage or save, end result is you need to borrow less for the new place.

Maying down the cuurent mortgage may be the better option.

For most of the costs of moving they are done at sale time so you don't actualy need to have them all in ready cash, just need to make sure they are in the budget.

sunshine_shell

Thank you i'm gonna sit down with my boyf and see what he thinks although i know his answer already!

"i don't know its your mortgage" bless him !!