Car Loan vs Mortgage

99AUXR · 10-11-2015, 04:46 PM

Now I have been saving for a while to get enough money to look at buying a rental property in the town I live in. Temporary accommodation is in high demand and most of the older houses that were around for the dam buildings are around 190-220k.

Am I better of to repay my car and then save for house or just go for the house and keep paying the car at $138pw?

I have a stable job as well lol.

Yellow_Festiva · 10-11-2015, 06:03 PM

Quote:

Originally Posted by 99AUXR

Now I have been saving for a while to get enough money to look at buying a rental property in the town I live in. Temporary accommodation is in high demand and most of the older houses that were around for the dam buildings are around 190-220k.

Am I better of to repay my car and then save for house or just go for the house and keep paying the car at $138pw?

I have a stable job as well lol.

Depends. What time frame are we talking about here? How long before you see yourself paying out your car?

If it takes another 12-18 months the same place may have increased in value making it more costly to buy.

IF you can afford to do both I would try to buy the house as soon as possible. 'Temp accommodation' may not look favourable to a bank when it comes time to ask for finance. It is also a shed load of work (been there, done that). But made a motsa in the process.

sexyxe · 10-11-2015, 08:15 PM

Financial advice from a car forum, when we don't know your personal situation is dangerous. Take your advice with a grain of salt.

99AUXR · 10-11-2015, 08:38 PM

Quote:

Originally Posted by Yellow_Festiva

Depends. What time frame are we talking about here? How long before you see yourself paying out your car?

If it takes another 12-18 months the same place may have increased in value making it more costly to buy.

IF you can afford to do both I would try to buy the house as soon as possible. 'Temp accommodation' may not look favourable to a bank when it comes time to ask for finance. It is also a shed load of work (been there, done that). But made a motsa in the process.

Car payment is still pretty much 2-3 Years would have to check date but I think there is something like 18k still on it (Paid NZ 32).

I think it was possible as long as I didnt mention the word rental it would go down as a first house purchase for myself opposed to accommodation?

I was just of the mindset that my car will be costing interest but like you say by the time i pay car off the house could increased in value making it pointless. Plus capital gains and return on income from the house?

Quote:

Originally Posted by sexyxe

Financial advice from a car forum, when we don't know your personal situation is dangerous. Take your advice with a grain of salt.

22, dont drink or smoke and can save majority of income as I live in parents basement?

b2tf · 10-11-2015, 09:27 PM

Personally buy property then use money from property to help pay off car loan.

But that's just me.

JC · 10-11-2015, 09:35 PM

Keep paying car, and buy the property. one is for living now, the other is for living in future....

superfly · 10-11-2015, 11:59 PM

You will save money if you pay your car out now. You can ring up your loan company and ask them the payout figure. But it takes ages to save for a deposit for a house, so I would put it into a house and buy it now. Houses normally only keep getting more expensive.

damo76 · 11-11-2015, 01:54 AM

Don't pay off a car, cars are the worst investment. You would be cheaper to drive around in a bomb, don't spend any money on it and buy a house while your young.

Ben73 · 11-11-2015, 12:27 PM

Quote:

Originally Posted by damo76

Don't pay off a car, cars are the worst investment. You would be cheaper to drive around in a bomb, don't spend any money on it and buy a house while your young.

This topic isn't about whether or not he should drive a bomb around, he already has the car.

I am in a similar situation. I own land and paying off a car. I have a bit of coin in the bank to go towards the house build, I am tempted to pay off my car, which means effectively I will have transferred my car loan onto my home loan instead. Since the home loan interest rate is better I am planning on still paying my standard car repayment each week, but will be paying it to the bank on top of the home loan minimum repayment. I am going to talk to a professional about it, but based on my figures it seams to be the way to go for me personally because I can afford to pay of car and still have money to go towards the build.

If you are in an either or situation, I would just buy a house and pay off the car as normal.

XG_Falcon · 11-11-2015, 02:51 PM

I'm a similar age and also looking for my first home. If you can afford to make the stretch, go for the house asap - it will be more than worth it in the long run.

I'd advise you really do the maths and make sure you won't be cutting your budget too thin though. I have seen friends happily spending big on credit (houses, cars, toys) only to see it bite them in the rear when their businesses started losing profit due to the waning economy.

It's easier said than done but try to look as far into the future as possible and cover all the bases when you're working out your finances. All the best.

Vesper Martini · 11-11-2015, 03:31 PM

When you apply for a mortgage you will need to disclose you are paying $138 PW for the car. I would get a lender in to discuss, they might recommend paying the rest of the car off against the loan.

So I would set up an appointment with a lender

& It also depends how much you need to pay to get out of the loan, normally there's a fee

LeadFoot81 · 11-11-2015, 06:21 PM

Quote:

Originally Posted by 99AUXR

Now I have been saving for a while to get enough money to look at buying a rental property in the town I live in. Temporary accommodation is in high demand and most of the older houses that were around for the dam buildings are around 190-220k.

Am I better of to repay my car and then save for house or just go for the house and keep paying the car at $138pw?

I have a stable job as well lol.

Advice from a financial/property investment planner would be very helpful in your situation.

Do you know what the weekly repayments would be on 190-220K? Could you afford them plus rates/utilities charges/insurance on the property plus your car repayments/running costs plus whatever else you spend money on (I guess you live at home?) And STILL save money? If so (it would seem) you're in the box seat. Have you got a little bit of money saved up, or a BIG chunk of money?

Interest only repayments on 220K wouldn't be very much (not sure what the interest rates are like in NZ) But what sort of income could the property generate as temporary accommodation? Consistency is king with rentals, getting someone nice who'll live there long term, pay on time, and not cause you any hassles.

If you were buying the house for yourself I'd say combine the property and the car into one loan to free up some money (on paper) and make a $138 p/week advance on paying off the loan (for at least as long as it would've taken you to pay off the car itself). You'll cop a payout fee on the car loan, but as long as you're past the first 12 months it shouldn't bee too bad; the benefit of freeing up cash and shifting debt onto a (home) loan with a lower interest rate would level everything out.

A lot to think about! Good luck with your decision.

nuthin' fancy · 11-11-2015, 06:55 PM

Consider this:

Will your loan be more than 80% of the purchase price? If yes, using funds to pay off the car will increase the cost of the mortgage insurance you will pay (it will be about 15% of the amount you don't put into the house).

Get a comparison of the costs of purchase with and without the car loan.

Buying the property with the car loan will also mean you can borrow less (you have to factor in the payment of two loans). This means that when the car loan is paid out, you will free up some cash flow. I think it is a good idea not to start too aggressively, money is as cheap as it has ever been, make sure you are ready for 8% interest rates when they come back.

Also, is the long term market where you want to buy or is it affected by a particular market condition? Many people in Australia who bought houses in places like Moranbah and Port Hedland are taking a bath now that the mining boom has slowed.

Temporary accommodation doesn't fit with a long term investment strategy, I think established markets are better, but I'm pretty conservative.

Ford Falcon XR6 · 11-11-2015, 07:55 PM

Quote:

Originally Posted by Ben73

This topic isn't about whether or not he should drive a bomb around, he already has the car.

I am in a similar situation. I own land and paying off a car. I have a bit of coin in the bank to go towards the house build, I am tempted to pay off my car, which means effectively I will have transferred my car loan onto my home loan instead. Since the home loan interest rate is better I am planning on still paying my standard car repayment each week, but will be paying it to the bank on top of the home loan minimum repayment. I am going to talk to a professional about it, but based on my figures it seams to be the way to go for me personally because I can afford to pay of car and still have money to go towards the build.

If you are in an either or situation, I would just buy a house and pay off the car as normal.

In very much the same boat as the OP I'm 22 and am paying off a block of land. Not a big drinker and I don't smoke.
The way I look at it a quarter of my wage each week goes to my block of land that for me is enough I leave the rest free to spend on paying the bills and having fun having a few cars.
In the next few years I want to build a house and move out which is why I sold my xr6 turbo and am going back to a cheap daily.
I say go for it a buy the property and pay off the car as normal. Best thing you can every do I buy property.