# Advise on CU Loan



## dree812004 (5 Nov 2012)

Hi
I took out a loan with my CU a few years ago to do up my house so 4.5 years ago I took out 18K I was working full time and on about 35K now I am on 17K work part time still paying a mortgage and 320.00 euro a month to the CU there is about 10K left plus interest does anyone know if I was to by some miracle safe up 5K and walk in and say put that off the loan not the interest or even the 10K what implications could arise?
Loan is murdering me on top of the mortgage going to see if I can reduce the Mortgage for 1 yr by approx 400.00 and save that up and pay off a lump sum if it is worth my while?
They have been terrible with advise up till now.


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## Padraigb (5 Nov 2012)

I suppose that the interest rate on the mortgage is lower than the rate on the CU loan; it makes sense to reduce the CU loan faster, even if that means paying your mortgage slower.

But what's the idea in saving up to create a lump sum? If you can get some relief on your mortgage payments, why not pay the €400 per month into the CU on a regular basis?


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## dree812004 (5 Nov 2012)

They will only let me reduce my mortgage payment for a certain amount of time I am hoping the proposal to reduce by 400 for 12 months will let me put that 400 off the credit union loan for that period of time thats 4800 for a year just I don't know what is better to do pay the extra 400 every month or save it up and pay in a lump sum?


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## Padraigb (5 Nov 2012)

I think you should pay it in every month: the earlier you pay, the more you reduce your interest charges. There is also the point that for some people (I don't know what you are like) having a fund building up could be a temptation.


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## dree812004 (5 Nov 2012)

I was going to give it to my mum I will start a rainy day fund when this is cleared again!


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## Crugers (6 Nov 2012)

I'm sorry but I'm finding it hard to make your numbers add up!

The interest you pay depends on your outstanding loan balance.
The quicker you pay off your outstanding loan balance the less total interest you will pay.
So if you can afford to pay more off your outstanding loan balance now you will have paid less interest over the full term.
I think saving up to pay off a lump sum is probably not the best idea if you are trying to cut costs!

_Can you walk in and ask for a lump sum to be applied to principal repayment?_
Usually CU's initially deduct the interest due from any payment and apply the balance against the principal. That would mean if you have been making regular repayments your interest would fairly up to date with only  weeks/month due (at max interest 10k = €100 interest per month)

They would be stupid NOT to accept a lump sum off the principal *if the other option was not to get a lump sum at all!* 

They may argue that they are entitled to apply any payment to interest first!!!

_what implications could arise?_
They may ask you where the lump sum came from!

_Loan is murdering me on top of the mortgage...

_ Go and make an appointment with MABS. They can help!

You could ask the CU to apply some/all your shares against the loan balance outstanding. It is a bit of a neuclear option and depending on your age it may not be the best option.
HTH


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## Bronte (6 Nov 2012)

If you are going to reduce your mortgage payments it would be much better for you to then repay the CU that extra amount monthly. 

Do you have shares in the CU.

Who is not giving you good advice, the bank or the CU?  And what exactly was the advice you were given.


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## dree812004 (6 Nov 2012)

Bronte said:


> If you are going to reduce your mortgage payments it would be much better for you to then repay the CU that extra amount monthly.
> 
> Do you have shares in the CU.
> 
> Who is not giving you good advice, the bank or the CU? And what exactly was the advice you were given.


 
The credit union have been giving me bad advise and I even went with MABS to and it was still the same out come with CU after MABS who are really good. I have every intention of putting the reduced amount of the mortgage against the loan in order to clear it as soon as possible.

I think what I needed to know has been answered which was do I pay off as much as I can when I can or do I try pay off later in a lump sum financially I needed to understand what would benefit better and now I see that paying off anything I can when I can is the best solution, thank you!


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