Thread: Need advice on getting loan

Want to buy a land lot and build a home. We own our current home and the only debt we have is our home mortgage and about £14000 in credit card debt. We want to buy the land first, and then save some money, then get the construction loan to begin building the house. Would it be better to save money for a down payment for the construction or to go ahead and pay off the credit card debt first? My concern is that the interest rates for loans right now are really good and if we pay off the credit card debt first then wait to save more for a down payment; loan rates will be a good bit higher because that will be about a 2-3 year period.

If it were me, I'd pay off the credit card first. I'm not sure if mortgage interest is tax deductible in the UK (guessing that is where you are from), but in the States it is. As such, higher mortgage rates are still better than paying high interest on a lot of credit card debt.

Also, interest rates do have some effect on real estate prices, since rising rates lower affordability (aka demand).

Since you currently own your home, you will continue to build equity during the time it takes you to pay off the credit card. The equity can be used as at least part of the down payment for your construction loan, which I'm guessing you were already planning on.

That's my $0.02, but I'm pretty conservative with money so others probably see it differently. Let us know what you end up doing... I'd like to hear how things turn out for you. Good luck!

I think you should pay off credit card first. Because it will help to build your credit and help you in future when you need money.