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Which is better??

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  • 31-08-2018 5:32pm
    #1
    Sparky85
    Registered Users Posts: 120 ✭✭


    Planning on selling current house early next year and buying the “forever” house.

    One of us has a loan which can be paid off either straight away from savings or can be paid off out of the equity when our current house is sold.

    Which would be better from the banks perspective when we go for mortgage approval as this will coincide with putting the current house in the market.

    Clean slate, no dept & less savings or outstanding loan but more cash in the bank?


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    #2
    Heres Johnny
    Closed Accounts Posts: 2,738 ✭✭✭Heres Johnny


    Pay now. You can't pay out of equity until sold and can't sell until mortgage is approved for new one so loan will come into the equation, maybe not hugely negatively but best be rid. Assuming of course it doesn't eat too much into your deposit.
    Loans generally are a negative thing to have so if you can, regardless of house move, pay down your balance if you can.


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    #3
    tobsey
    Registered Users Posts: 1,275 ✭✭✭tobsey


    Don’t do anything without talking to the banks first. What you do will depend on whether you need a bigger deposit or whether you need a bigger ability to pay each month. If you can still afford the stress tested mortgage after paying the existing loan repayment each month, the banks mightn’t insist on you clearing the loan. Therefore you would have a bigger deposit and can get a bigger mortgage on the 20% LTV rule.


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    #4
    Westwood
    Registered Users Posts: 535 ✭✭✭Westwood


    Yep as above see what they require based on your outgoings they maybe happy with the debt on the side especially if it's owed to them! But clearing debt is always prudent especially when in your case you're taking on more of them same. The most important thing to show is savings accumulating over time....


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