remortgage to clear debts

mackidee

Help please! I need to clear a 3k overdraft and a personal loan balance 2.5k as my circumstances have changed and the repayments are crippling me.I have been appoved for a virgin 0% credit card but with a limit of only £1500,so obviously not enough to reduce the debt significantly.I have considered applying for further 0% cards, but am not sure how feasible a plan that is.As my mortgage(Halifax)stands at 25k against a house value of 110k,a further advance would be the obvious way to go,but the sticking point is I may be moving house in the next 12 months so I'm wondering if there is a way to avoid the arrangement and early repayment fees.My current interest rate is 6.39%,would it be cheaper to remortgage completely with another lender or am I better staying with the devil I know until I decide where I'm going to be living in a years time?
Any advice welcome,my head is spinning trying to work it out! Thanks.

helLcat

I'm in a similar position myself mac. I have 1.4k overdraft and 2.5k on 0% card. Should i extend my mortagage to clear debt or maybe have a payment holiday to gradually clear the debts... my mortgage payments are £650 per month.

I have 70k equity in my house and can't see how else to get rid of it... just want a clean slate and better budgeting skills...

Any advice gratefully received.

Precious_Thing

Hi,

I can't give you advice, but I borrowed 10k out of 35k equity in my flat to clear my debts of 5k and to do some home improvements.

For me I felt I was just wasting so much money paying interest on my current account and wanted the pressure taken off. The hardest bit for me is to make sure I never end up with debts again, if possible. My ex left and I had to pay his half of the mortgage and bills which is what got me into trouble in the first place 2 years ago.

I am now making sure I live on what I earn and am trying not to use my overdraught at all. I feel a lot better for the decision I made.

Good luck with whatever you decide to do, I'm sure someone will come along and give you some good advice.

Precious Thing.

mackidee

Thanks to you both for replying,
I also have considered the payment holiday option Hellcat,coupled with the virgin card and some even more serious belt-tightening than I'm already doing,but it would take a long time to make much impression on the total and like you & Precious I just want to start afresh(I also only got into this because of my ex!)so I think I'll just pay the fees and take the further advance.I know that if I do move I'll have the early redemption charges as well, but for the amount I need the extra monthly repayment will be around £50 (atm the interest on the overdraft alone is £35) taking my mortgage to £250 a month and no loan,no overdraft,peace of mind.Thanks again, you've helped me make a decision I've been dithering over for weeks.Good luck to you both.

helLcat

I changed my current account to Alliance and Leicester and their free overdraft recently... it worked out well and at least I,m not paying the HSBC £12 per month!

Also if you make sure that you ask for your new mortagage to be 'portable' i.e. you can take it with you when you move then there won't be further penalties to pay if you do move house.

Good luck to you too

mackidee

Thanks again Hellcat, yes I intend to change to the A&L current account when this is sorted out,I looked into it already but they wont match an existing overdraft limit unless you can be in credit for a while first..hence the virgin card but my limit isnt enough to clear the overdraft.Hopefully I can soon set that up once the remortgage comes through with a nice low overdraft limit which I will try to keep out of altogether.Thanks also for the tip about moving the mortgage,I didnt think Halifax did that but I will certainly ask.Best wishes.

Precious_Thing

All the very best, I hope that sorting this out relieves pressure for you like it did for me.

Take care,

Precious Thing.

wendybird

Have you posted in DFW board? The folks over there usually advise against this as most people just get into more debt and over the long term you will pay A LOT more on that 5.5k in interest. If you post your situation and your Statement of Affairs (there is a sticky on how to do this), they can usually work miracles on that. If you can get more 0% interest on CC and clear it that way you would be much better off in the long term (in my humble opinion)! Good luck whatever you decide!

mackidee

Thanks Precious,I hope it will.All the best to you too.
Wendy,thanks for the advice....I know its not the ideal solution and the long term costs are higher,but in the short term & with the possibility of moving on the horizon the prospect of an extra £50 monthly on the mortgage against £235 for loan and overdraft payments coming from my modest income feels like the quickest & easiest way to deal with it.Rather than trying to juggle the debt in a few different places with a head that to be honest is still getting round the break up that caused this mess in the first place,I'll be able to relax,budget properly for my new circumstances,and stop worrying about money(well,apart from the ridiculous electricity prices..dont get me started on that one!) so while I know its not the cheapest way I think for me its the best way just now.Thanks again,best wishes.

Toughluck

Worth looking at the term you have on your mortgage and the total lending amount based on what you need to clear your debts.

If you can reduce your outgoings by consolidation and keep the term the same or better reduce it then it may be an option. as you said "it is crippling you" so you may need to do something before you feel really stressed and start defaulting. don't forget that if you do consolidate unsecured debt into the mortgage you may end up paying more interest depending on the term recommended.

mackidee

Thanks Toughluck,its good to see that a mortgage adviser doesnt think its a totally stupid idea - and yes the stress was getting to me so the decision is made!
I phoned Halifax yesterday and sorted everything out.I have to say I was impressed with the level of service...they were friendly,helpful & efficient.I was offered a rate for existing customers of 1.39% over base rate tracked for 5 years with a fee of only £99 but tied in,or 1.69% over base rate tracked for whole term which includes both the further advance & the original mortgage.I accepted the second option over the same term as my original loan (17 years left) as it is more flexible.I will be able to manage the new repayment much easier now so I may ask them to reduce the term to 15 years and save a lot of money in the long run.I can make overpayments without penalties,and can move the whole amount with me on those terms if I do move house.After Oct 09 there are no early repayment fees either.The paperwork has been emailed through to my local branch where I have an appointment to go and sign it on Thursday.The cash will be put into my current account(and clear the overdraft!) there and then.By weekend I will also have paid off the personal loan,and may be able to get a nights sleep - in fact I feel better already!!
Thanks to you all for your help and advice,best wishes.