Which debt should I chip off first?

[Guest]

Hi all, just looking for opinions.

Owe 1600 on student loan and 4793 on one credit card.

Expecting a 2k bonus which I’ll use to chip off the debt.

Sainsburys is interest free till October, min payment is around 120 per month but paying 300 to get it down asap.

Student loan charges 4.5%.

Applying for a remortgage soon and apparently student loan debt is never considered?

Have a flawless credit rating.

Which debt should I chip off first? I’m thinking credit card despite it being interest free as will lenders look at the 300 per month negatively? So should I reduce that debt then go down to min payment whilst remortgage application goes through?

Any opinions welcome, thank you.

[Ehma]

if you are UK the student loan is different and should be looked at more as a tax. it get deducted from salary so mortgage companies take it into account but more in terms of an expense than a debt.

before considering paying it off you should look into whether you will pay it off... if not do NOT even overpay it will be written off and you don't get that money back. If it turns out you will then pay off. but they are sneaky and tale the money each month but don't pay it off ypur debt until the end of the tax year. so put the money into a (high interest) savings and pay off near the end of the year. better for you to get the interest than them.

[Bernardine]

Personally, I would pay off student loan, one less to worry about, then rest off cc, if you are paying 300 a month on cc then 18 months & you will clear it, or try for a 0% cc.

Good luck

[Ruth]

Personally I don't think either is a problem, SL not considered and as you havn't missed a payment on the other that's nothing to worry about. Therefore I would wait until you have your mortgage in place to see what you can afford. You may be better adding to your deposit to get a better deal. Once that's sorted and you have you new home budget sorted look at clearing the highest interest rate even of its the SL if you are 100% you will otherwise clear it rather than it being written off.

[Anne]

A credit search will show your lender what you owe and whether you have been meeting your commitments. They won't look on your application any more favourably by you paying more than your agreed monthly payments.

However, when you remortgage and inform them you are paying more than you need to, they may consider affordability and question whether you can afford the new mortgage...affordability is their decision not yours. In your position I would pay what you originally agreed pay and a small amount over minimum payment on credit card until your remortgage is complete. Then start paying extra.

[Nicola]

You should normally chip away at the one with the highest interest.

Use the snowballing method (google snowball calculator) but since your credit card is interest free I would still use that opportunity to pay down the balance.

[Alex]

Student loans don't count as a debt. I owe £15000+ but it isn't taken into account for mortgages etc. Your credit cards do. Just let the payments chip back on your student loan, I've worked out how much interest I pay on my student loan monthly and pay that as an extra payment each month on top of the money taken out of my pay.

With such a small amount left just let It pay off slowly. Focus on your credit card, the mortgage company will see you paying more than minimum payments which is a good thing.

[Julian]

Too many factors around but on face of it, but the £2k in a savings account 4%+ till your 0% credit is finished then use it to pay of the credit card.