Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • moneyconfused.com
    • By moneyconfused.com 12th Jul 17, 5:15 PM
    • 1Posts
    • 0Thanks
    moneyconfused.com
    Loan to pay off Debt
    • #1
    • 12th Jul 17, 5:15 PM
    Loan to pay off Debt 12th Jul 17 at 5:15 PM
    My husband and I have taken on a a large amount of debt due to home improvements / renovation project that we are currently drowning in and really need some help on the best way we can pay this off.

    We have 5 credit cards all currently maxed which comes to approx £15k. I have been moving them around on 0% balance transfer and 0% purchases but min payments come to approx £200 a month. But obviously only paying the min isnt clearing the debt and because we are struggling with money I find that we end up spending on the cards which removes the point of payments.

    We have a personal loan at 3.6%apr which was originally £13k but from payments is now £8k outstanding, we pay £300 a month on. (this was taken out on a 4yr term and we have till Jan 2020.

    PLUS we owe parents and grandparents £22k, which we haven't even started to pay back yet.
    Plus we have a high mortgage. On top of this I have recently gone back to work after maternity to a part time job so dropped in salary.

    We are literally struggling so badly with money especially to try and make a dent in all of these debts.

    My first question is would you recommend taking out a loan at hopefully a 2,8%apr over 6-7 years, to pay off the current loan, im not sure what the clever thing to do is around paying loans off.

    My second question is, what else can we do? I feel we are struggling so much and our credit history is looking rubbish and I just want to pay less a month. PLEASE help...

    Thanks is advance for your advice.
Page 1
    • zx81
    • By zx81 12th Jul 17, 5:22 PM
    • 12,497 Posts
    • 12,662 Thanks
    zx81
    • #2
    • 12th Jul 17, 5:22 PM
    • #2
    • 12th Jul 17, 5:22 PM
    Consolidation rarely works. And if you're drowning with your current debts, you won't be accepted for any more.

    You need to address the debts in rate order - throw as much as you can at the highest rate, minimums on everything else (plus £1 in the case of cards). Once you've chipped away at the total, you may open up other options.

    Visit the DFW boards for advice on cutting costs.
    • TadleyBaggie
    • By TadleyBaggie 12th Jul 17, 5:23 PM
    • 2,304 Posts
    • 1,664 Thanks
    TadleyBaggie
    • #3
    • 12th Jul 17, 5:23 PM
    • #3
    • 12th Jul 17, 5:23 PM
    If you are struggling with a large amount of debt then no one is going to give you a loan with 2.8% APR. You can't borrow your way out of debt.

    I suggest you make your way to the Debt Free Wannabe forum and ask for help there.
    • Pixie5740
    • By Pixie5740 12th Jul 17, 5:29 PM
    • 10,613 Posts
    • 14,587 Thanks
    Pixie5740
    • #4
    • 12th Jul 17, 5:29 PM
    • #4
    • 12th Jul 17, 5:29 PM
    Even if you could get a £15k loan at a rate of 2.8% APR could you afford the repayments? Taken over 6/7 years the repayments would be around £200 a month and you seem to be struggling paying £200 a month to credit cards.

    My advice is to put together an accurate statement of affairs and post it on the Debt Free Wannabe board for advice and suggestions on how to trim your budget to free up money to pay your debts.

    http://www.stoozing.com/calculator/soa.php

    If your SOA shows that after making some cut backs you still have more going out than you have coming in I suggest you complete Step Change's Debt Remedy Tool.

    https://stepchange.org/debt-remedy
    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.
    • SparklesJD
    • By SparklesJD 12th Jul 17, 8:39 PM
    • 72 Posts
    • 110 Thanks
    SparklesJD
    • #5
    • 12th Jul 17, 8:39 PM
    • #5
    • 12th Jul 17, 8:39 PM

    You need to address the debts in rate order - throw as much as you can at the highest rate, minimums on everything else (plus £1 in the case of cards). Once you've chipped away at the total, you may open up other options.
    Originally posted by zx81
    More on this here:https://debtcamel.co.uk/debt-options/snowball/

    I fear that you're thinking of borrowing more against your house, based on the rate you've quoted?

    Think very, very carefully about doing this - at the moment the worse that your creditors can do is take you to court. Convert this to secured debt and if things go wrong you could lose your home - http://www.moneysavingexpert.com/credit-cards/move-debts-to-mortgage

    I know it's uncomfortable to owe money to friends and family and that might well be the main concern you're trying to address with consolidation, but once you start snowballing, you can sit down and work out an affordable repayment plan.
    Worker in, and passionate advocate of, the credit union movement. I don't speak for the sector or for any individual CU. My opinions & experiences are my own.

    Search MSE for more info about CUs and find ones that cover your area by searching online for 'find your credit union'.
    • DCFC79
    • By DCFC79 12th Jul 17, 8:57 PM
    • 29,542 Posts
    • 18,670 Thanks
    DCFC79
    • #6
    • 12th Jul 17, 8:57 PM
    • #6
    • 12th Jul 17, 8:57 PM
    Can't see you getting a loan at a suitable rate that would be of use to you.
    Last edited by DCFC79; 12-07-2017 at 9:20 PM.
    Je Suis Charlie
    • macman
    • By macman 12th Jul 17, 10:23 PM
    • 40,944 Posts
    • 16,755 Thanks
    macman
    • #7
    • 12th Jul 17, 10:23 PM
    • #7
    • 12th Jul 17, 10:23 PM
    At the risk of stating the very obvious, what you need to do is reduce your expenditure and/or increase your income. Borrowing got you into this debt, more borrowing won't get you out.
    Can you sell your property, thus realising some equity in the house from the improvements, and reducing the mortgage?
    Last edited by macman; 12-07-2017 at 10:26 PM.
    No free lunch, and no free laptop
    • enthusiasticsaver
    • By enthusiasticsaver 12th Jul 17, 10:38 PM
    • 3,659 Posts
    • 6,571 Thanks
    enthusiasticsaver
    • #8
    • 12th Jul 17, 10:38 PM
    • #8
    • 12th Jul 17, 10:38 PM
    You are struggling with a perfect debt storm which is taking on too much borrowing at the same time as reduction of income and presumably childcare costs and the other costs of bringing up a child. Borrowing more, even if it were to consolidate existing debts would not solve this problem in fact it would make it much much worse.

    Cutting expenditure or increasing income is the only way to get out of this unless you sell your house. You have a high mortgage and £500 monthly repayments on unsecured debt. Moving from 0% credit cards to a personal loan which will probably be a much higher rate would not be a good move. If the credit cards are on 0% even minimums will be reducing the debt albeit slowly. You can try increasing the term of the personal loan or your mortgage temporarily to reduce the monthly payments and look at all expenditure to see where you can cut back. You can look at returning to work full time if it is financially worthwhile.

    Are your parents and grandparents happy to wait until you are more on top of your debt before you start paying them back? Incidentally if they lent you money for your deposit this would have affected your mortgage application if you declared it. When we gifted money to our daughters to help with house deposits we had to say it was a gift and not a loan and we were not expecting them to pay it back.
    Debt and mortgage free and saving for early retirement
    • ReadingTim
    • By ReadingTim 13th Jul 17, 11:43 AM
    • 1,683 Posts
    • 2,437 Thanks
    ReadingTim
    • #9
    • 13th Jul 17, 11:43 AM
    • #9
    • 13th Jul 17, 11:43 AM
    You're not paying off debt, you're adding to it. Reword your thread title to see if for what it is: "Loan Debt to pay off add to debt"

    You need to make sure you spend less than you earn, so find ways to decrease what goes out and increase what comes in.
    • davidwood123
    • By davidwood123 13th Jul 17, 1:04 PM
    • 401 Posts
    • 1,004 Thanks
    davidwood123
    If you are struggling with a large amount of debt then no one is going to give you a loan with 2.8% APR. You can't borrow your way out of debt.

    I suggest you make your way to the Debt Free Wannabe forum and ask for help there.
    Originally posted by TadleyBaggie
    Certain MP's think you can
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

2,708Posts Today

9,123Users online

Martin's Twitter
  • Byebye! I'm about to stop work & twitter, to instead spend glorious time with Mrs & mini MSE. Wishing u a lovely summer. See u in 10 days.

  • WARNING Did you start Uni in or after 2012? The interest's rising to 6.1%; yet it doesnt work like you think. See https://t.co/IQ8f0Vyetu RT

  • RT @JanaBeee: @MartinSLewis Boris is the anomaly (coffee), the others are versions of normal (beer). Lots of same candidates = vote share d?

  • Follow Martin