Reduce loan or keep savings?

C

corcaigh2008

Registered User
Messages
44
Bit of advice required.

At present i have a loan with balance of 10,400 DR. There is still 3 years to run on this loan and i pay back 330 per month on it.

Also i have saving of just over 7,000.

Now should i use the savings to reduce the loan balance and try clear it as fast as possible or just keep paying it off each month while continuing to boost my savings.

What looks better from a local council point of view if i apply for affordable housing or shared ownership?

Or what would banks advise as best?
 
Chances are you would be better off reducing your borrowings with any spare cash especially of the rate charged on the loan is more than what you stand to earn on deposit.

Banks advice might be to do whatever earns them and costs you most money!
 
I've always been told that if i have savings then i shouldn't have a loan. that i should always pay savings off any loan i have outstanding. It works believe me. If u have savings, pay it off ur loan. I had a loan of 5k and was told by the bank when i went for mortgage, that if i reduced my loan (or got rid) i was talking an extra 40k or more of a loan they'd give me.
 
Thanks for the advice. The reason i asked was that i recall reading on here somewhere that somebody said they were in similar position and were buying through shared ownership with the council. And i think they said the council advised them to keep the savings!
 
corcaigh2008 said:
Bit of advice required.

At present i have a loan with balance of 10,400 DR. There is still 3 years to run on this loan and i pay back 330 per month on it.

Also i have saving of just over 7,000.

Now should i use the savings to reduce the loan balance and try clear it as fast as possible or just keep paying it off each month while continuing to boost my savings.

What looks better from a local council point of view if i apply for affordable housing or shared ownership?

Or what would banks advise as best?
Click to expand...

I am not sure what the best thing to do from a county council point of view is as they tend to run their Affordable housing schemes differently. I am in the middle of sorting out an offer with DCC.
They have never actually asked for evidence of savings or evidence of any loans that I have. However if you are going to be borrowing money from a financial institution then any money you owe at the time of a mortgage application will greatly reduce the amount you can borrow, this is true of any housing transaction affordable or not.
EBS who I am borrowing from work on a debt to income ratio and if your debt to income ratio is higher due to a loan then the amount that you can borrow will be less. Generally your total debt to income ratio has to be below about 40% of your net monthly income.

If the council that you are applying to is not assessing your income and out goings directly, such as DCC then you could probably just keep paying off the loan. The lead time for an affordable housing offer can be as long as 1 to 2 years.
If and when you are offered a place you will most likely be told that you have to clear the loan if you want a higher mortgage by a lender so you could at that point settle the loan.

Go to a bank that offers AH loans and tell them your income and debt obligations see what they will lend you. Then ask them what they would lend you with no debt obligations, then you can decide what the best way for you to proceed is.

I think that most people in general will advise you that having outstanding debts will reduce what you can borrow for a mortgage so where possible you should reduce you debt obligations to maximise your mortgage borrowing potential.
 
You must log in or register to reply here.
Back
Top