Re-mortgage to clear debts

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Hi Guys

I have come to the end of my fixed rate and am about to re-mortgage. I am going for another fixed rate, but to free up some extra monthly cash I am thinking of extra borrowing. This would be to cover 2x loans (£16500 combined, 3.5 years left on both) and several outstanding credit card balances (£2000, £4300, £2000 and £2200).

Is this a good idea? I would be gaining around £1000 a month for an extra £300 (roughly). I know that I'll be paying more in the long run but need the monthly cash.

Many thanks

Darren
«1

Comments

  • RAS
    RAS Posts: 32,794 Forumite
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    Hi

    definately not recommended on MSE. You are securing unsecured debt and paying much more interest. Start by posting the 2 scenarios into the snowball in www.whatsthecost.com, whilst I go and ferret out a few links.

    Then report back with the total amount of interest paid in each case and the number of years it takes to clear the debts.
    The person who has not made a mistake, has made nothing
  • RAS
    RAS Posts: 32,794 Forumite
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    Hi again

    If you post up an SOA as explained here http://forums.moneysavingexpert.com/showthread.html?t=107280, pople here can help you save money.

    And if you are in financial stress, plase contact one of the debt charities here http://www.moneysavingexpert.com/loans/debt-help-plan#help
    The person who has not made a mistake, has made nothing
  • Junglydaz
    Junglydaz Posts: 10 Forumite
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    Thanks RAS

    Will try and get the info together. I am due to see the Building Society on Weds so time is short!

    PS. Not sure how to use the snowball!
  • RAS
    RAS Posts: 32,794 Forumite
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    Please do not get railroaded into anything. Also remember that in the current climate the lower your loan to value percentage, the better the interest rate you get.
    The person who has not made a mistake, has made nothing
  • Junglydaz
    Junglydaz Posts: 10 Forumite
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    Statement of Affairs and Personal Balance Sheet

    Monthly Income Details
    Monthly income after tax................ 2335
    Partners monthly income after tax....... 0
    Benefits................................ 0
    Other income............................ 0
    Total monthly income.................... 2335


    Monthly Expense Details
    Mortgage................................ 872
    Secured loan repayments................. 401
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 128
    Electricity............................. 60
    Gas..................................... 63
    Oil..................................... 0
    Water rates............................. 54
    Telephone (land line)................... 25.5
    Mobile phone............................ 25
    TV Licence.............................. 11.95
    Satellite/Cable TV...................... 17.6
    Internet Services....................... 18
    Groceries etc. ......................... 180
    Clothing................................ 0
    Petrol/diesel........................... 100
    Road tax................................ 17.5
    Car Insurance........................... 33.84
    Car maintenance (including MOT)......... 15
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 100
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 12
    Contents insurance...................... 11
    Life assurance ......................... 135
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 0
    Haircuts................................ 0
    Entertainment........................... 0
    Holiday................................. 0
    Emergency fund.......................... 0
    Total monthly expenses.................. 2280.39


    Assets
    Cash.................................... 250
    House value (Gross)..................... 210000
    Shares and bonds........................ 0
    Car(s).................................. 8000
    Other assets............................ 0
    Total Assets............................ 218250


    Secured Debts
    Description....................Debt......Monthly...APR
    Mortgage...................... 130000...(872)......6.49
    Secured Debt.................. 12500....(401)......6
    Total secured debts........... 142500....-.........-


    Unsecured Debts
    Description....................Debt......Monthly...APR
    Credit cards...................10500.....210.......15.9
    Car Loan.......................7900......257.......14.1
    Total unsecured debts..........18400.....467.......-


    Monthly Budget Summary
    Total monthly income.................... 2,335
    Expenses (including secured debts)....... 2,280.39
    Available for debt repayments........... 54.61
    Monthly UNsecured debt repayments....... 467
    Surplus(deficit if negative)............ -412.39


    Personal Balance Sheet Summary
    Total assets (things you own)........... 218,250
    Total Secured debt...................... -142,500
    Total Unsecured debt.................... -18,400
    Net Assets.............................. 57,350


    Created using the SOA calculator at https://www.makesenseofcards.com.
    Reproduced on Moneysavingexpert with permission.



    Two adults and one child in the family. My partner gives me £400 towards bills/mortgage. I think that all the details are correct.
  • Junglydaz
    Junglydaz Posts: 10 Forumite
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    Anyone got any ideas?
  • rayday2
    rayday2 Posts: 3,960 Forumite
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    I would definately avoid putting them on your mortgage, sorry to say but looking at the fact you already have a secured loan it is obvious that you "struggle" with debt.

    If you were to remortgage and combine it and then end up struggling again you are seriously risking your property. I would think about talking to a debt charity.
  • RAS
    RAS Posts: 32,794 Forumite
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    Junglydaz wrote: »
    Statement of Affairs and Personal Balance Sheet



    Monthly Expense Details
    Mortgage................................ 872
    Secured loan repayments................. 401
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 128
    Electricity............................. 60
    Gas..................................... 63
    Oil..................................... 0
    Water rates............................. 54
    Telephone (land line)................... 25.5
    Mobile phone............................ 25
    TV Licence.............................. 11.95
    Satellite/Cable TV...................... 17.6
    Internet Services....................... 18
    Groceries etc. ......................... 180
    Total monthly expenses.................. 1855.05


    My partner gives me £400 towards bills/mortgage.

    Welcome

    Is the £400 from your partner included in your income? Do you get child tax or working tax credits? Child benefit?

    It looks as if your core monthly expenditure is £1855.05 and your partner is only contributing £400.

    Is that because s/he only earns that much, or because they do not pay for their share of the household expenses?
    The person who has not made a mistake, has made nothing
  • Junglydaz
    Junglydaz Posts: 10 Forumite
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    She has her own problems believe it or not. We pay the gas, water, electric, sky, tv and telephone out of a joint account. I pay £310 into it she pays £100. She then pays £400 into my bank account to help with the mortgage. I kept her affairs separate to make things easier.

    I have a £16500 loan that she makes the payments for as the bank wouldn't let her take one out in her name.

    My mortgage is split, £50000 on interest only, the rest on repayment. My endowment (surprise surprise) is under performing, however I have my gratuity from leaving the Navy to bump that up (it matures in 2018, I leave the RN in 2015). I also have a savings plan maturing in 2012 that will give me around £6500.

    I guess that what I am saying is that my mortgage will reduce significantly in 10 years anyway, so why not free up some monthly money now? I can overpay the mortgage by £500/month anyway, which I could do with the freed up money if spare at the end of the month.

    Am I better off getting a long secured loan (10 years)? Should I continue doing balance transfers with my cards?
  • Junglydaz
    Junglydaz Posts: 10 Forumite
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    Trying to bump!
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