How to consolidate

pestcontrol

Hi,

I am a property owner. I owe the mortgage lender (Nat West) £142,000 (@ 6.59%) & my property is worth £210,000. I have been told by Nat West that I can't re-mortage & I am tied in to their mortgage for about 3 years (if I leave I think I would pay around £5,000).

I have a credit card debt for £4,635 (@ 21.9%).

I have a personal loan of £10,193.07 (@ 5.5% above the bank's base rate). I think this is secured on the property.

I have a secured (property) personal loan for £15,180.16 (@ 11.89%).

I just took out a business overdraft for £3,000 (@ 4.5% & arrangement fee £130).

My credit rating is 428.

I had my own business for 5 years (self employed) & merged my company with another one in Aug 05 (we have become a new Limited company). The 'new' company will be paying ourselves the basic wage & dividends (dividends so that we make the most of tax laws).

Although the 'new' company has made a profit of £8,000 (I will get 50%, mostly in dividends) for the months of August & September I won't get paid until November/December (the company will owe more more money too by that stage).

I am sinking & feeling very sick. Things are really bad. I stupidly thought I had a bad credit rating, so went for bad debt credit givers (loan & credit card). I've read lots of the this website, but can't work out what would be best for me.

I wondered if anyone knows if a mortgage lender would give me a re-mortgage (to get more money) without me having to pay the penalty for leaving my current lender, who could be best for me to consolidate the money I owe with (I understand I could only borrow a max of £25,000) without affecting my credit rating bearing in mind I am not 'employed' & don't have any wage slips from my 'new' company yet?

I have considered selling my property, but don't want to lose the £5,000, my business partner & I are working from my home & I'm worried I won't sell it in time to pay what I owe. I really don't know what to do.

I would be extremely grateful for any advice anyone could give me.

MANY thanks!!

nearlyrich

Hi Pestcontrol, welcome to debtfree wannabe.


There are a few things in your post which are not too clear (to me anyway) so here are a few questions for you...


Have you done a budget for your income and expenditure? See above for links to a spreadsheet to assist.

Is consolidating your debt the best way forward, have you any income left to pay off these debts after you have spent money on essentials?

Sadly many people see consolidation as the end of their debt, in reality it just extends the cost by reducing the payments over a longer term. ( Thereby attracting more interest)

If you feel like posting more details of your budget and spending there are lots of people who can offer sound advice.

I hope this helps....

pestcontrol

Thanks so much!

I am going to do a spreadsheet today to work out how much I actually spend. I lead quite a meagre lifestyle as I don't have any money, but am loathe to say I am still smoking (which I know I really shouldn't be as I can't afford to - aside from the health reasons). Other than stopping smoking I'm not sure I can really cut back (toast for breakfast, lunch & dinner yesterday!). However, I do sometimes pay for going out for lunch/drinks/dinner with my boyfriend because he nearly always pays & I feel bad about it (he like sto go out a lot as he can afford to).

I've changed utitility companies (from looking at this website I will save a couple of hundered/year).

My salary will be £6,000 pa, but we will be taking dividends (for Aug/Sept I will take £4,000, but I need to wait for our clients to pay first - at some point in Nov). How much we will get in dividends will really depend on the jobs that we get in, but our new company will be making a vast amount more than my old one (eg. we're up for a 1 day job that's looking very good that will make me £3,500 for 1 day's work). So I know that I will be able to pay off what I owe, but think it will be better if I decrease the interest rates, if I can that is. My business partner paid herself £50,000 last year & that was a quiet year.

I think consolidating my debt would be the best way as the interest rates I'm currrently paying are quite high (I thought I was a bad risk so went for the Bad Debtors loans/cc), but am unsure if I could go for a loan or a credit card at a lower interest rate (balance transfer) - if my credit scroing is ok, & if so which ones.

Really, thank you so much for your help!

nearlyrich

pestcontrol wrote:

but am unsure if I could go for a loan or a credit card at a lower interest rate (balance transfer) - if my credit scroing is ok, & if so which ones.

Low or 0% balance transfer credit cards are a good idea if you can get approval, you could have a look at the credit card board and Martin's articles on gthe main site for the latest offers. Be careful of applying for too much credit as the searches will show up on your record and will affect your credit score etc.

Is your boyfriend a live in committed relationship type of boyfriend, someone who might help you out now to reap the rewards of your success with you later? If you live together and plan a joint future it's probably time for a heart to heart.

There are loads of good ideas for eating on a budget, cooking good food from scratch see the Old Style Board for that.

You have identified smoking as being something that you can't really afford to do, have you got a plan to get through giving up.

Another useful site for lots of reasons is What's the cost, you can work out how to prioritise your debts and even how much your treats are costing.