Add lumpsum to reduce mortgage or short-term borrowings?

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cmalone

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I know I read some comments re. above here previously- so forgive me as I couldn't locate same yesterday for a work colleague.

She has lumpsum of 10,000 coming her way and wanted to know what was best use of same?

Her mortgage is c. 165,000 and tracker i think 4.6%- but she has 2 short-term loans 22,000 in bank 6.9% fixed over 5 years and another in Credit Union c. 12,000 at 8% i think

Should she pay off the credit union loan or use the lumpsum to do something else?
 
Assuming no penalties are incurred in doing so, the best thing to do is to pay off on the most expensive loans, in this case the C.U. loan. Better still, assuming she has no problems with the current level of repayments she should keep the repayments at the same level and pay off the remainder of the C.U. loan all the quicker.
 
You or your friend should both pay off high interest loans or credit cards as this is likely out weigh the precentage return you would get on an investment.
 
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