Debt Or Mortgage ?

[Everett]

I may be in the lucky position in the not too distant future to pay off my debts.

 

However all my debts combined ( they are all unsecured ) amount to roughly the same as my mortgage

of which I have never missed a payment.

 

Last year I took the opportunity of fixing it for ten years at 4.9 %

this takes it to the end of its term and I sleep easy knowing that the forecast increases in interest rates,

over the next few years wont effect me.

 

However if I settle early there is a £3K penalty.

 

By clearing my mortgage I can free up £525 a month or on the other hand not have to find it if times get hard.

 

But I also have a DMP with CCCS which will take about thirty years to clear at its present payment rates,

and of course if I clear my mortgage, they will take this as disposable income and distribute it accordingly.

 

I know my DMP will then clear at a much faster rate,

but I am also sorely tempted to clear all my debts and get rid of all that hassle.

 

What is generally advised in this situation, clear the Debt or the Mortgage ?

[silverfox1961]

Hi,

Personally, I would go for the debt. Your mortgage is safe for the next 10 years but with your debts, you could save some money.

 

If any of the debts are overdraft charges then I think (at the moment) it is easier to pay them that to fight for them back (unless something changes in the next few weeks)

If you have loans and credit cards, you could CCA whoever is holding the debt and if any come back faulty, you could make a reduced offer to clear the debt. If you have had PPI on any loan/credit card, was this mis-sold?

 

fox

[hilaryfrances]

I too would clear your debts, you will pay far more in interest on them and why loose £3000, once you have cleared your debts you could save a little each month out of the money you are saving. This would act as a cushion against unexpected bills