Save down payment vs pay off debt

7 posts in this topic

Hi Guys,

 

One question, which one is better save down payment for house vs pay off debt. For example, let's say I have a personal loan of EUR 30000 and I have savings of 40000 EUR, which I want to use for down payment of buying house. Which is better, repay the loan or use the money for down payment?

 

Thanks,

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So, you have 70K and owe 30K?  You want to know if you should pay off the 30K and then have 40K?  Not sure what you are asking.

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Ask your bank for an offer without a down payment and with one. Compare the costs and then compare to the cost of your personal loan. Maths....

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49 minutes ago, krakp said:

Ask your bank for an offer without a down payment and with one. Compare the costs and then compare to the cost of your personal loan. Maths...

Are there still banks in these times that give mortgages for 100-120% of the purchase price? (In this case OP doesn’t even have own capital for extra costs such as brokerage fees, notary tax etc., so the mortgage would have to be for >100%). On top OP already has a debt of 30k... Wouldn’t want to have an account with a banker that gives out such mortgages...

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11 hours ago, Akash3apr said:

Hi Guys,

 

One question, which one is better save down payment for house vs pay off debt. For example, let's say I have a personal loan of EUR 30000 and I have savings of 40000 EUR, which I want to use for down payment of buying house. Which is better, repay the loan or use the money for down payment?

 

Thanks,

 

What's the interest rate of the debt you hold, and what was the reason to take it? In almost any case the only right answer to your question is to pay off your debt. Living with debt is no way to live, a mortgage you can afford being the only exception. From the looks of it you can pay it off today. Do it and start saving afterward. You'll do it much more easily without debt dragging you down. 

 

PS: Banks take into account your liabilities when computing your net worth, so for them you'd have only €10,000 Eigenkapital anyway.

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well, simple: compare the interest rate you're paying for that personal loan (I'm guessing something around 3,8%) to the current mortgage interest rate (maybe somewhere around 1,5%) - then you have your easy answer.

 

Just pay off your debt, and then buy that house.

 

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