What to do with 20K now to move house in 2 years

[jenni]

Currently on low rate tracker with outstanding mortgage 45k and house value 120-130K We want to move to a larger house in the next year or two and unsure what is the best thing to do with a gift of 20K recently received. We have 1000 euro credit card debt and 2500 credit union loan, and no other debts. Assume we pay those immediately, what is the best plan as far as looking good to secure a mortgage for a move in the next couple of years, pay off some mortgage or save it?

 

[Bronte]

There is no need to pay down the mortgage particularly as you are on a tracker and you will in any case be able to repay it when you sell. Of course you should pay off your other debts and save the money into a high paying savings account. Do not put an offer on a house until you have sold your own and the money from that is in your bank account.

 

[jenni]

Thanks. Is it best to sell our house first then, and rent while finding another? We have 5 small kids and hence the move.

 

[michaelm]

Is it best to sell our house first then, and rent while finding another?

I would think so. I'm currently renting, and looking, having sold last Easter. Getting a mortgage will be as big a challenge as finding a buyer, and a clutch or kids will militate against your application.

 

[Brendan Burgess]

I'd be slow to pay off the mortgage in case the bank offers a discount for early repayment of trackers.

A €45k tracker is probably saving you around €1,000 a year in interest. While this is a good saving, it's not sufficient to make you stay in an unsuitable home to save your tracker.

As it takes a long time to sell a house, you should probably put it on the market now. When it's sold and you have cash in the bank and mortgage approval you will be able to move fast when buying a house.

Brendan