Should we clear loan with savings for house deposit?

[TOB76]

Hi,

I have been reading over the various posts on this and I'm aware that the general consensus is that it doesn't make sense to have a loan while you have savings. I'm really just posting here to set my mind at rest and see what people advise so here goes:

Our current financial situation is that we are finally getting around to saving and dealing with our finances better (hopefully). We have a credit union loan of 4,000 with 1,000 in shares so 3,000 owed.

We have been saving 1,000 per month since mid Jan so we have 3,000 in our savings account. We are hoping to save for a deposit on a house.

Should we clear our loan immediately now we have some savings or keep going as we are for another few months til we've a little bit more saved?

We are both civil servants so are being hit with the levies etc. and will probably find it difficult to keep up our savings of 1,000 per month when we see the impact of the budget in may. We are hoping that we will continue to by tightening our belts a little more though.

Would love to hear any opinions on our situation,
Tks for reading

 

[Gmol]

Hi there,
If you pay off the loan with your current savings, you can then add the amount paid out to service the loan to your savings.
House prices are widely expected to fall so it may be of further benefit to keep saving throughout the year as you may need less of a deposit in say 6 months