Keep Pay Credit Union Loan or use Mortgage Money

V

vwgal

Guest
Hi, I was wondering if anybody could give me some guidance please. Last year I took out a mortgage and also applied for a €10,000 loan from credit union for car. The mortgage is drawn down in stages and whilst waiting for first stage, I used the €10,000 credit union loan to pay a contractor. Later on, I bought a car for €5,000 using the mortgage money, so in theory the credit union loan should only be €5,000.

I am currently paying back the full credit union loan (i.e. €10,000) but I was wondering if it would make more financial sense to draw €5,000 from mortgage money to offset this loan and leave me with a credit union loan of €5,000 and less on the mortgage? The credit union do not charge any penalties for paying lump sum. Also, I am only in the first year of mortgage.

Thanks.
 
You will save money by paying the highest interest loan first, which is presumably your credit union loan. However, there may be admin processes involved in drawing down an extra €5k on your mortgage, and your bank may not be too keen on giving a top-up so early in the life of the mortgage. Can you accellerate payments on the CU loan to clear it early?
 
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