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    • AdKM
    • By AdKM 20th Mar 17, 12:36 PM
    • 43Posts
    • 1Thanks
    Consolidate loan into new mortgage?
    • #1
    • 20th Mar 17, 12:36 PM
    Consolidate loan into new mortgage? 20th Mar 17 at 12:36 PM
    Hi all,

    My 2 year fix comes to an end August 31st.

    Outstanding mortgage balance £180,300.
    Current term left is 18 years 7 months.
    Current mortgage repayment is £997 at 2.29% (fixed rate).

    When I took out this mortgage my property was a 1 bed flat (worth £290k)
    It is now a 2 bed flat after I borrowed to make the changes (recently valued at £425-445k).
    I'm in South London hence the ridiculous valuations....

    I took out a £25k loan (5.5% APR) with monthly repayments of £478.
    Current outstanding balance is £19k

    I also had £8k on a credit card (0%). Current outstanding balance is now £4k, but 19% APR due to kick in in October.

    I am self employed currently earning circa £44k.
    I also have a lodger paying £700 per month.

    On paper I am earning well, but in reality my cash flow is unpredictable and I always feel like payments are tight.
    On a gut level I feel like consolidating all my debt into a new 5 year fixed over a new 19 year term) so my monthly outgoing will be less. I am newly single (at 44) and fancy loosening the belt a little so it's not all work, work, work, which it will be if I keep paying my loan off for the remaining 4 years.
    On the other hand, if I can see the next 4 years out I will surely pay less interest overall if I don't consolidate my debt and keep the loan separate.
    The other thing of course is that I might not be able to remortgage with so much 'new debt'!

    What's the clever thing to do from a financial perspective?
Page 1
    • foxy-stoat
    • By foxy-stoat 20th Mar 17, 4:45 PM
    • 1,561 Posts
    • 862 Thanks
    • #2
    • 20th Mar 17, 4:45 PM
    • #2
    • 20th Mar 17, 4:45 PM
    If you can afford to continue with your current debt then do that, maybe take out a money transfer card and clear a chunk off the loan, but the rate looks ok to me.

    Rather keep paying down the debt and be clear in 4 years than pulling equity out of your home and stretch out the payments for another 19 years.
    • AdKM
    • By AdKM 20th Mar 17, 5:16 PM
    • 43 Posts
    • 1 Thanks
    • #3
    • 20th Mar 17, 5:16 PM
    • #3
    • 20th Mar 17, 5:16 PM
    Yes. That does sound sensible. Can't wait for that 4 years to pass! Not good to wish your life away in that respect though!
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