Clear our debts or keep saving?

Bassfish

Hi, hope I'm posting in the right forum,
Basically myself and the wife have a goal of a house deposit within 18 months. The arrangement we've been working with for the past 8 months is that I've been saving 500 a month or so and the wife has been paying off our wedding loan at roughly the the same rate. We've now reached the point where we have more saved than we owe, nice place to be!
The figures are:
Debts=
Balance of Loan- €3200 dr
Credit cards- €1100 dr
Assets=
Savings in deposit account- €5200

Net balance €900 cr

We went to see a mortgage advisor who advised us build up a consistent pattern of saving and to not dip into those savings until we're ready to buy a house?
My question is now, given that we have more than we owe, should we clear all of our debts and start combined savings from scratch or should we continue as we are so as not to break our pattern of saving and let the wife continue to pay off the loan?
Im far from financially minded but I thought it would make more sense to clear our short term debts as it's more expensive form of finance in the long term. How would either approach be viewed by a bank when we are applying for a mortgage?
I'd appreciate any advice on this, thanks in advance.

shamrock55

Id clear the debts, not much good having a few pound saved if you still have debts

marco_polo

I'd probably clear it off as well tbh or at the very least the credit card. Be sure and check if there are any early payment penalty clauses on the loan and if so how much it would cost relative to finishing the term out.

I would think that saving the guts of €1000 pm for 18 months or so would still look pretty reasonable to most bank, I'm not sure a once off dip to clear remaining debts would make all that much of a difference (Once it remains a once off of course ).

I'm certainly no expert but I am in a broadly similar position to yourself aside from the debt (maybe 12 months further down the road that you are), and the impression that I have got from preliminary discussions I have had with a few lenders is that they don't care quite so much about the exact amount you have saved (above covering at least the minimum deposit of course), but more that you have a history of living well within your means and could sustain interest rate increases or other unforseen stuff and still service the mortgage.

They also love debt free people but it looks like that you would have that well cleared by application time either way so shouldn't be a issue.

December2012

Definitely clear the credit card debt ASAP. Then don't run up credit card debt again. Always pay it off, it will help your application.

Bassfish

marco_polo wrote: »

I'd probably clear it off as well tbh or at the very least the credit card. Be sure and check if there are any early payment penalty clauses on the loan and if so how much it would cost relative to finishing the term out.

I would think that saving the guts of €1000 pm for 18 months or so would still look pretty reasonable to most bank, I'm not sure a once off dip to clear remaining debts would make all that much of a difference (Once it remains a once off of course ).

I'm certainly no expert but I am in a broadly similar position to yourself aside from the debt (maybe 12 months further down the road that you are), and the impression that I have got from preliminary discussions I have had with a few lenders is that they don't care quite so much about the exact amount you have saved (above covering at least the minimum deposit of course), but more that you have a history of living well within your means and could sustain interest rate increases or other unforseen stuff and still service the mortgage.

They also love debt free people but it looks like that you would have that well cleared by application time either way so shouldn't be a issue.

Thanks for that, ya clearing the debt seems to be the general concensis of most people we talk to.

strandsman

ya clear your debt, and get ready for your whopper of a debt.......A MORTGAGE

0ph0rce0

Just reading this, I had a good bit saved (well to me anyway) Credit Cards maxed out and a few other debts.

Just cleared everything after reading this why save and pay minimum amounts then get charged a heap of interest every month?

I'm stone broke now but feel like the worlds been lifted off my shoulders, A good few hundred extra a month to go play with too happy days.

Sorry for hijacking but thanks for the post

Bassfish

0ph0rce0 wrote: »

Just reading this, I had a good bit saved (well to me anyway) Credit Cards maxed out and a few other debts.

Just cleared everything after reading this why save and pay minimum amounts then get charged a heap of interest every month?

I'm stone broke now but feel like the worlds been lifted off my shoulders, A good few hundred extra a month to go play with too happy days.

Sorry for hijacking but thanks for the post

All good bro, fair play, nice feeling to be debt free (I imagine)

AlmightyCushion

0ph0rce0 wrote: »

Just reading this, I had a good bit saved (well to me anyway) Credit Cards maxed out and a few other debts.

Just cleared everything after reading this why save and pay minimum amounts then get charged a heap of interest every month?

I'm stone broke now but feel like the worlds been lifted off my shoulders, A good few hundred extra a month to go play with too happy days.

Sorry for hijacking but thanks for the post

You should really build up your savings again, if even only to have an emergency fund.

0ph0rce0

AlmightyCushion wrote: »

You should really build up your savings again, if even only to have an emergency fund.

I will, i save every month, but now clearing the debt i have that extra money to save and play with :pac: