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Loans V Credit Cards V Savings

I have a debt of around 10,000 split between credit cards and loans. I also have savings of 2000.

I am looking into getting a mortgage in a couple of months.

I know that if I were to use my savings to pay off some of the debt I would reduce the amount of interest I am paying but I have been keeping it in case of emergencies.

From the point of view of a bank lending to me. Is it better for me

to use the savings to pay some of the debt off are stay as I am?.

Intuitively it would seem like reducing the debt would be better but I know that banks are really only interested in your ability to repay so having savings would seem to reduce the risk for them.

Also given that my loans and credit cards interest rates are approximately the same do the banks have a preference for where your debt is.

thanks in advance

G
Reply to
GraemeC
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If you're buying a property with the mortgage, doesn't that require a deposit? Where is that coming from?

Reply to
Roger Mills

You're mistaken, you don't actually have any savings. What you have is money that you're stupidly keeping in the bank instead of paying down liabilities that are costing you in interest. Anyone with a 2K credit card limit can go and draw it all out of an ATM and say they have 'savings', but it's not the same.

Reply to
vilemerchant

Thanks for the lack of help and abuse.

As I said in my post, I know that I could save money (Which incidently would amount to less than10pounds a month.) but I have that money there in case I should lose my job I would still be able to make payments in the short term. So don't say what I am doing is stupid. If anyone actually has any answer to my specific question I would be grateful.

Reply to
GraemeC

have a play around with some of the calculators on the banks/building societies websites, they'll show some idea. in my experience applications look more favorable when particularly credit card debts are reduced, although loan payments will of course count towards affordability calculations, so depending on your income and mortgage requirement this could also be relevant. dont be afraid of going into a few places and asking.

Ian

Reply to
ian.tomes

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