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Pay off mortgage or credit card?
muzer
Posts: 95 Forumite
I'm looking for some advice. I will soon have around £10k maturing from a policy. I currently have 10k on a 0% credit card (interest free until March 2019). I owe about 50k on my mortgage at 1.89%. I also have 25k in current accounts (rates between 1.5 and 3%).
Should I be looking to use the 10k to pay off a chunk of the mortgage or get rid of the credit card? Would I be better just using the money in the current accounts to reduce my mortgage?
I am possibly looking to move in the next year which is whats clouding the decision somewhat. Would it be useful in my mortgage application if I got rid of the credit card now before applying?
Thanks in advance for any help
Should I be looking to use the 10k to pay off a chunk of the mortgage or get rid of the credit card? Would I be better just using the money in the current accounts to reduce my mortgage?
I am possibly looking to move in the next year which is whats clouding the decision somewhat. Would it be useful in my mortgage application if I got rid of the credit card now before applying?
Thanks in advance for any help
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Comments
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From a psychological aspect would you not want to clear your £10k debt? And, as you say, it'll help with your potential house move.
I presume your £25k is for the new house?0 -
What will your credit card balance be in two years time?0
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Until you decide on the move, put it in Premium Bonds, or top up your current savings pots..._0
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PeacefulWaters wrote: »What will your credit card balance be in two years time?
I'm only paying the minimum payment (100 a month). So the balance in 2 years will be about 7.5k. I took out 11k and put that money in a Santander 123 (plan was to make a bit out of the interest from that account for three years before paying off the card)0 -
armchaireconomist wrote: »From a psychological aspect would you not want to clear your £10k debt? And, as you say, it'll help with your potential house move.
I presume your £25k is for the new house?
I'm not really worried about having 10k debt ( the money I withdrew on the card is currently making 1.5% interest so it still makes sense for me to keep it in savings)0 -
Until you decide on the move, put it in Premium Bonds, or top up your current savings pots..._
I currently have 20k in Santander 123 (1.5%), 3k in tesco (3%) and £1500 in TSB (3%). So my current account - savings pots are all full. Are there any other options?
My main worry is does having a balance on a credit card affect my credit score? Would it have a detrimental affect on a mortgage application. If it does thats my only reason for paying off the credit card (so I have no debt apart from my current mortgage). Why is it beneficial to put the 10k in premium bonds rather than pay 10k off the mortgage?0 -
3 x Bank Of Scotland = £15k @ 3%
Another Tesco = £3k @ 3%0 -
What is the point of having money in bank accounts at 1.5% while paying mortgage at 1.89%?:huh: Or those are emergency savings?The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers usually to difficult choice between two undesirable options.
Often people seem to use this word mistakenly where "quandary" would fit better.0 -
While your credit card is on 0% interest, it surely makes sense to either put that money into a current account or overpay the mortgage. No point paying off 0% debt before you need to.0
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Your credit score is only affected if you have a record for missing payments. Any debt will be taken into account when you apply for a new mortgage...................
My main worry is does having a balance on a credit card affect my credit score? Would it have a detrimental affect on a mortgage application.........
Why is it beneficial to put the 10k in premium bonds rather than pay 10k off the mortgage?
The advantage is that you have more options with easy acces cash. Once you pay down the mortgage, it's 'gone'.
If you are going to move, then plan it and do it. If not, hang on to easy access cash in case the credit card causes unforeseen problems..._0
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