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  • FIRST POST
    • BobbyLit
    • By BobbyLit 7th Jul 16, 7:27 AM
    • 6Posts
    • 2Thanks
    BobbyLit
    Debt worries
    • #1
    • 7th Jul 16, 7:27 AM
    Debt worries 7th Jul 16 at 7:27 AM
    Hi everyone - can anyone help. My husband and I are both weighted down with credit due to a sudden situation that meant we had to take out every available credit card and loan we could. Our 0%s are now coming to an end and although we can make our payments in the short term we are worried as our work has dropped off due to Brexit fears. I have two questions that I wondered if anyone could advise on

    1. I was alerted to a new credit search on Experian this morning (my credit score is now Fair) and when I looked it was listed as an insurance broker and then below it were dozens of individual searches from insurance companies. I haven't applied for insurance and can only think this is my home insurance being renewed, which I thought was with one company. I'm now worried all these searches that I didn't ask for will have an effect on my score? Does anyone know about this?

    2. The reason I'm concerned is that we desperately need to find a consolidation loan. We are happy to secure it against our house but despite decades of working really hard, having good credit ratings, never ever missing a repayment on anything and having a lot of equity in our house, loans are now deemed to be not "affordable" for us. We want to use the loan to get rid of our credit card and loan debts but lenders don't see it that way and the debts count against us. Does anyone have any ideas. We are getting desperate and are likely to have to sell our family home if we can't find a sizeable loan soon? Even securing it against the house doesn't seem to overcome the "affordability" issue...

    Thank you...
Page 1
    • zx81
    • By zx81 7th Jul 16, 7:45 AM
    • 9,400 Posts
    • 9,237 Thanks
    zx81
    • #2
    • 7th Jul 16, 7:45 AM
    • #2
    • 7th Jul 16, 7:45 AM
    The insurance searches are nothing to worry about. Neither is you score from the CRA come to that, as no one sees it and it's not a measure of anything.

    If your debts are too high for further borrowing, you need to cut costs and throw your cash at the highest rate debt.
    • BobbyLit
    • By BobbyLit 7th Jul 16, 9:02 AM
    • 6 Posts
    • 2 Thanks
    BobbyLit
    • #3
    • 7th Jul 16, 9:02 AM
    • #3
    • 7th Jul 16, 9:02 AM
    Thank you. We have cut our costs back as much as we possibly can. We have sold our car and shop from budget stores. We rent rooms out in our house to pay for food and expenses for our children. What we are desperate for is to find a consolidation loan that will pay off all the high interest cards and give us one manageable payment a month - and will also mean we are actually paying off the debts rather than just the interest. We have the equity in our house but borrowing on our mortgage is not an issue. Despite earning a reasonable amount and never having defaulted on any payment to anyone the "affordability" calculator gets us every time....
    • zx81
    • By zx81 7th Jul 16, 9:07 AM
    • 9,400 Posts
    • 9,237 Thanks
    zx81
    • #4
    • 7th Jul 16, 9:07 AM
    • #4
    • 7th Jul 16, 9:07 AM
    What are your debts, rate and income?

    You're very unlikely to get a consolidation loan as the risks are too high for the lenders, but perhaps there are smaller changes you can make.
    • Thrugelmir
    • By Thrugelmir 7th Jul 16, 9:27 AM
    • 51,336 Posts
    • 43,166 Thanks
    Thrugelmir
    • #5
    • 7th Jul 16, 9:27 AM
    • #5
    • 7th Jul 16, 9:27 AM
    If you need advice. The National Debtline is totally free and impartial.

    https://www.nationaldebtline.org/
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • DCFC79
    • By DCFC79 7th Jul 16, 9:48 AM
    • 27,771 Posts
    • 17,534 Thanks
    DCFC79
    • #6
    • 7th Jul 16, 9:48 AM
    • #6
    • 7th Jul 16, 9:48 AM
    Your credit ratings aren't seen by lenders so don't pay too much attention to them.

    You mention "work has dropped off due to Brexit fears" what fears are these, nothing is known yet what will happen.
    Last edited by DCFC79; 07-07-2016 at 10:02 AM.
    Je Suis Charlie
    • SeanG79
    • By SeanG79 7th Jul 16, 1:31 PM
    • 822 Posts
    • 362 Thanks
    SeanG79
    • #7
    • 7th Jul 16, 1:31 PM
    • #7
    • 7th Jul 16, 1:31 PM
    Not what you want to hear, but you almost never get approved for a consolidation loan if you NEED one. (This is due to the risk the lender cant be assured you wont keep the existing debt on top of the new loan.

    It is almost never a good thing to convert unsecured debt into secured debt by using the mortgage.

    As much as what it's not what you want to do, if you cannot afford to pay off the current minimum payments, it is probably better to go into a DMP (speak to Stepchange or another free debt charity for advice)
    • BobbyLit
    • By BobbyLit 7th Jul 16, 1:55 PM
    • 6 Posts
    • 2 Thanks
    BobbyLit
    • #8
    • 7th Jul 16, 1:55 PM
    • #8
    • 7th Jul 16, 1:55 PM
    Thank you everyone that's really helpful. We earn £4000 a month between us, which almost covers our rent, direct debits for council tax, electricity etc and our loan and credit card repayments. We have two loans, an old HP agreement and nine credit cards between us. Five are still on 0%, two have some 0% and some 21% and two have just come off 0% and are now 19%. We can just about manage to pay all the minimum payments but our work has dropped off while people assess the current situation. It will probably pick up but we don't know if we can hold out that long. We have cut our spending down to the bare minimum, just living off a small amount we make by renting a room out. Even without the work dropping off this isn't a long term solution - we need to find a way of getting out of this hole and thought a large secured loan against the house would be the answer but it doesn't sound likely....thank you for all your help
    • Thrugelmir
    • By Thrugelmir 7th Jul 16, 1:58 PM
    • 51,336 Posts
    • 43,166 Thanks
    Thrugelmir
    • #9
    • 7th Jul 16, 1:58 PM
    • #9
    • 7th Jul 16, 1:58 PM
    You say you rent but own a property?
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • SeanG79
    • By SeanG79 7th Jul 16, 2:07 PM
    • 822 Posts
    • 362 Thanks
    SeanG79
    You say you rent but own a property?
    Originally posted by Thrugelmir
    They let out rooms in their home to lodgers...
    • BobbyLit
    • By BobbyLit 7th Jul 16, 3:04 PM
    • 6 Posts
    • 2 Thanks
    BobbyLit
    Sorry yes - should have said let not rent...
    • BobbyLit
    • By BobbyLit 12th Sep 16, 8:32 AM
    • 6 Posts
    • 2 Thanks
    BobbyLit
    Hi - I just wanted to follow up on my original post in case it helped anyone else. Back in July we were really feeling at the end of our tether having been turned down for consolidation loans on the grounds of affordability and with rising credit card payments to make as we came off 0% deals. We decided to have one last try and did a soft search through MSE to see what came up. It suggested there was a small chance one or two banks might consider us so we decided to have one last go even though we knew it might damage our credit score.The search came up with a broker who took us through the very gruelling application. We DID have to secure the loan against our house but we would have remortgaged if our mortgage company had agreed (they'd already turned us down on grounds of affordability too). The lender insisted on consolidating all our debts so it is one almighty loan and it will be over 15 years. We have also had to pay substantial broker's fees which have been included in the loan. BUT our monthly repayments have dropped from £1700 and rising) to £550. We are no longer juggling approximately a dozen loans/credit cards and trying to switch/transfer when we have poor credit ratings. We are healthier and happier because of this. It has transformed our lives. We did not get into this mess because we were spendthrifts - we have always managed our money well but became caught in a domestic situation that spiralled out of control. This could have happened to anyone. I want people to know there can be light at the end of the tunnel when it all seems very dark. We thought our chances of getting a consolidation loan were nil - as I think did those who commented here but it IS worth trying one of these soft searches and then talking to a broker to see what can be done. As long as you know what you are getting into and are confident you can make the payments. We have closed all our loan and credit card accounts - and cut the cards up.
    • enthusiasticsaver
    • By enthusiasticsaver 12th Sep 16, 10:05 AM
    • 2,568 Posts
    • 4,378 Thanks
    enthusiasticsaver
    A word of warning to others in the same situation is turning unsecured debt into secured is rarely a good idea.

    Obviously in your situation you have felt it has helped due to reducing repayments but as some of your credit cards were on 0% I would not have taken the option you did. If for any reason you are unable to meet the payments you risk losing your home and inevitably you will end up paying more in the long run as this loan is now over 15 years. You do not say how much your total borrowing is and well done for cutting up the credit cards but consolidating debt is usually unsuccessful in the long run and more expensive.

    Saying that if you now feel that you are on top of the situation that is a step forward. What rate did you end up having to pay?
    Debt and mortgage free and saving for early retirement
    • BobbyLit
    • By BobbyLit 10th Oct 16, 8:01 AM
    • 6 Posts
    • 2 Thanks
    BobbyLit
    Hi - thank you for your reply.

    It was 4.1% and we did have to pay the broker a fee which was added to the loan. It really was a last resort for us. We were facing a situation where we wouldn't have been able to make our mortgage and other payments soon. We were on a serious downward spiral.

    It wasn't ideal but we had exhausted all other avenues and short of selling our house had no other options.

    This has enabled us to hold on to our house and makes our outgoings much more manageable. We would have remortaged if we could but despite having a lot of equity in our house they wouldn't let us say it was not "affordable."

    We have never missed or made a late payment in 30 plus years of managing our own finances but even our own bank would not consolidate our debts for us. In fact, they made the situation worse by assuring us (even though we told them the figures were likely to come out as not affordable as we'd been through it with the building society) it would be fine and then then under writers turned us down, damaging our credit ratings.

    We were falling off our 0% credit card deals and incurring high monthly payments.

    I am certainly not advocating a secured loan to other people unless it really is a last resort but it really has made a huge difference to us.
    • Pixie5740
    • By Pixie5740 10th Oct 16, 9:35 AM
    • 8,873 Posts
    • 11,889 Thanks
    Pixie5740
    Personally I wouldn't recommend anyone doing what you've just done. You've taken what, £73k of unsecured debt and secured against the roof over your head and will end up repaying £99? How long will this secured loan remain at a rate of 4.1%? The life of the loan or only for the first couple of years?

    If you had contacted National Debtline instead of continuing to scrabble around getting a consolidation loan the interest on your unsecured debt could have been frozen and/or you could have started a DMP or possibly an IVA would have been a better solution. Now that you've secured these debts against your home you don't have these options available to you if you start struggling to keep up with repayments.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
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