Hi, I have a personal loan at 3.9% (taken out with a credit union to purchase a car) with £8700 remaining on it. I pay this off at £300 every 4 weeks, direct from my salary. 

 

I am between refinancing at 2.9% and extending the term to reduce payments to £200/month to give a bit more disposable income for mortgage application purposes or clearing the loan from existing savings which forms a wee bit of contingency. 

 

Does anyone know what would be the best approach to take from an 'able to borrow the most' perspective? 

Has the mortgage company instructed you to pay off the loan?

If not, ask a broker what they think.

Also, how much is the car really worth, both in cash terms and utility value.

You may be better off getting something cheaper to run around in.  Don't overvalue your car, it is just a car, a better one will come along next week.

39 minutes ago, SteamyTea said:

Has the mortgage company instructed you to pay off the loan?

If not, ask a broker what they think.

Also, how much is the car really worth, both in cash terms and utility value.

You may be better off getting something cheaper to run around in.  Don't overvalue your car, it is just a car, a better one will come along next week.

No - I've done the assessment with Ecology and they've given the okay 'in principle' but looking at bank statements our discretionary spending is a bit more than my frugal estimates at assessment stage so having a bit more cashflow might give a bit more comfort. No broker involved.

 

There's two cars in there, both 14 plates not worth much more than 4.5k apiece but required to get to work and ferry the kids about, and both about as fuel efficient as you can get for the age/type. They'll be ran into the ground as we've no interest in cars bar hopefully switching to electric and ditching one of them if the numbers work when we move.