Mortgage preparation

Alane34

Registered User
Messages
4
Hi all,
I'm new to the group and have found it very helpful, I hope I'm posting this in the correct section,

I'm hoping to buy my first property in possibly the 2nd half of next year,

I will be looking at houses in the 230k price range and I have 30k in savings with my credit union,

I was saving on average 200 euro per week to get to this point, now last January I had to change my car and I borrowed 15,800 from my credit union at 70 per week over 5 years, I have always overpaid between 100-125pw

Once I hit the 30k saving mark I reduced my savings to only 25 a week and upped my car repayment to 400 per week through salary deduction, my logic is get that loan cleared asap,

I had a brief informal chat with a broker about my situation he feels I'm doing wrong as I should keep saving and let car loan return to a slight overpayment,

I was of the opinion it would look good on my credit report to show loans cleared in full early, but also the day my savings dropped from 200 to 25 pw my car payments increased from 120 to 400pw

And as both are with my employee credit union this is easily proven,

What would be your opinion on this?

Many thanks
 
Cash savings pays zero in interest.

CU lending looks like it costs you 7% to 8%.

I would clear the loan asap.

Maybe keep a low level of saving going to show that it's still going up, but the loan is costing you money.
 
 
Hi thanks for the reply,

That was my logic aswell, I've reached and gone a bit of the magic 10%,

My car loan is 6.8% I was basically looking at my repayment capacity, been divorced and having a court ordered 150pw maintenance agreement which I have had in place for 8 years and never missed a beat on, I'm already at a slight disadvantage,

Although I feel banks are a bit more understanding of divorced people solo buying, I'm lucky as my ex and I didn't own property together,

Also friends have said clear the remaining 6000 from my deposit saving and rebuild at 400 pw but it's been such a long road to reach 30k and a matter of pride I'd hate to dip into it as I haven't touched a penny of it,

So many options it's hard to know, I personally in my gut is saying stick with paying 400 a week and when that is cleared do 6 months of just solid saving
 
and a matter of pride I'd hate to dip into

I think you should put pride aside and structure your finances to look as attractive as possible to a mortgage provider.

Talk to a few different brokers and see what they advise. But in general having cash on deposit while paying interest on a loan makes no sense.

That €6,000 of a loan will cost you €400 over a year. Clearing the loan means you could save the €400.
 
With a car loan, some banks will lower your affordability as many people simply take out a new loan to buy a new car once the existing loan is paid off.
 
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