Pay Off Debts With Savings Article Discussion Area

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  • united4ever
    united4ever Posts: 525 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
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    I wonder what the forum would advise me to do.

    I have £3500 student loan at 3.6% currently

    68k mortgage at 2.5% currently - i can make unlimited overpayments

    I have about 3k in the bank.

    Should I put the 3k in an Isa, overpay on mortgage or kill the student loan?

    Which is cheaper?
  • black_taxi_2
    black_taxi_2 Posts: 1,816 Forumite
    Debt-free and Proud! Mortgage-free Glee!
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    keep 3k as an emergency fund
    Pay off student debt
    Then worry about o/p
    £48515 interest £181 (2009)debt/mortgage-MFIT/T2/T3
    debt/mortgage free 28/11/14
    vanguard shares index isa £1000
    credit union £400
    emergency fund£500
    #81 save 2018£4200
  • biggazdixon
    biggazdixon Posts: 2 Newbie
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    I have roughly £4700 on a credit card at 16.9% and I have 3200 savings earning 1% however these savings are for my tax bill as I'm self employed. My next tax bill is at the end of July so it occured to me to put the savings against the card, keep adding any money I would normally save for tax to the card whilst making the same level of monthly payments to further reduce the debt and then pay my tax bill with the card. This would incur a 1.4% fee from HMRC but I would be better off overall.
    However, I'm worried about the chance that my card's credit limit could be sliced and I end up unable to pay my tax with it. So, am I better off taking out a new 0% card, putting the debt on it with a BT fee of 3% and trying to clear that instead? At least I would know that whatever happens I can pay my tax in July.
    It seemed simple to start with but the more I think it out the less obvious it becomes!
  • Ralfi
    Ralfi Posts: 1 Newbie
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    I understand that it is better to pay off a mortgage rather than save a new amount of money. But what about if you have say 40.000 in an isa. Should I use this money to pay off a mortgage considering it will take me years to build up a large Isa saving again. This year I will get around 800 pounds in isa interest. Is it just a question of whether I pay more than 800 pounds interest p.a. On my mortgage?
    Thank you
  • nigandjules
    nigandjules Posts: 43 Forumite
    First Anniversary Combo Breaker First Post
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    Does it make more sense to transfer £5000 to a 0% cc (already approved and 1.5% fee= £75, to be paid in full over 2 years (and will be )

    or


    sell premium bonds and isa savings and pay it immediately.

    Im erring toward the CC as I think over 2 years I have more chance of accruing £75 back through small prises and interest...


    Your opinions please?
  • xdeadeyeduck
    xdeadeyeduck Posts: 1 Newbie
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    Hey guys, just wondering if I'd be better off getting a 0% balance transfer credit card and pay of my £1350 debt over a period of 2 years or use the £1114 saving I have to clear it down to a couple of hundred?

    The house I'm renting is up for sale, so I will likely need money for deposit and fees - although I will have time to save towards that before I move.

    Any advice would be appreciated.
  • RRatchet
    RRatchet Posts: 58 Forumite
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    In mine & my OH's case our debt is mainly in the form of a business O/D (we have a small mortgage on a property we rent out) & no other debts. We are asset rich but cash poor. We are self employed, made a loss last year and currently do not earn enough to pay tax. We do however have personal savings that would pay off about 1/3 of our O/D which might then lead to a reduction in the O/D limit at our next review. However we will not be doing that because there is no guarantee that we could reborrow/increase the limit if we needed to in the future. Our savings are a buffer allowing us time to explore our options should the bank call in the O/D which they could do at any time. They are not likely to but they have the power to do so. We can at the moment replace our banger/washing machine/buy groceries etc without being beholden to the bank. Withdrawal/reduction of the O/D would mean we were unable to take drawings and hence immediately we'd have no income.

    Martin's advice is good but it does need tailoring to each individual circumstance.
  • Chris_Damien
    Chris_Damien Posts: 1 Newbie
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    Hi, Im looking to clear an old school fees debt which original stood at £25k now down to £13k paying £250 a month. I have some savings which I wanted to approach the school with a Full and Final setllement figure with and wondered if there was a realistic % I should approach them with knowing they would probably want more. Any advice much appreciated.
  • Justman
    Justman Posts: 1 Newbie
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    I have some savings, and have debts with o%, and paying on each debts. would it be beneficial to pay off debts, or still save
  • Theslayer1
    Theslayer1 Posts: 1 Newbie
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    Afternoon all-first ever post but looking for advice please.

    I have received monies from my endowment and am going backwards and forwards as to which debts to pay off first.
    I have a mortgage of which £22,000 is interest only and 8 years left on the mortgage term.
    Myself and my husband have a couple of credit cards and a loan and I'm debating whether I should pay any costly debts first, rather than the interest only amount, and use the extra money to make in roads in this amount.

    Thanks in anticipation (husband is useless so need help please)
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