Mortgage free or loan free?

financialdunce_2

I’m currently on a DMP after a period of illness and downtown in work led to financial problems. I seem to be over that and will soon be in a position to clear all the debts on the DMP and also make a hefty overpayment on my mortgage.

However I’ve just realised that an alternative might be to pay off the mortgage entirely and used the remaining funds to pay off the majority, but not all, of the unsecured loan and credit cards which are the only things subject to the DMP. That would leave me mortgage free and only with manageable unsecured debts to service.

I like the idea of getting rid of the unsecured debts since they were the only ones I had problems with anyway regarding late payments and a couple of defaults registered: I haven’t missed a payment on any of my priority debts including the mortgage. The mortgage also has a loan facility built into it should I need to borrow, and has a better interest rate than the unsecured debts. So perhaps I should pay off the unsecured debt and trundle along with the mortgage.

On the other hand, the mortgage is obviously secured against my home, so unsecured debts have less built-in potential for real disaster. This logic makes me think it’s better to pay off the mortgage and deal with the unsecured debt later.

So which would be better? Mortgage free or unsecured loan free?

All advice welcome,

Financial Dunce

BlondeHeadOn

Compare the interest rates you are paying for the loans and the mortgage, as this might help you decide.

I must admit, my initial reaction was to pay off the loans (of course!!), but when I thought a bit more, it is an interesting question. I think I am conditioned to think that 'everyone has a mortgage' so this seems less of a 'debt' than the loans and CCs. But as to 'why' - I am not sure!!

Does anyone else have this reaction?

Bismarck

hmm...you're luckier than most...in a way...depends on your mortgage deal and the payment terms on the outstanding debts and your age, future earnings capability & retirement plans....all sorts basically...

in the current climate I wouldn't underestimate the willingness of a provider to put a charging order on you if you messed about with unsecured debts.....

anyone willing to offer a firm opinion would need some numbers to work on....