Consolidating Debt onto Mortgage-Are we doing the right thing????

reckyroo

Hi
My Hubby and I have found ourselves with a lot of credit card debt - mostly due to rising bills etc. We have a mortgage of 37k which has jus come to the end of its deal, but cc debts of 18k. I think we should consolidate our debts and have looked into this at a cost of 900 pounds per month, all in. We currently pay 500 for the mortgage and a further 800 for cc/loan/overdraft debts and consolidating would give us 1 payment only.
I think this is the best option for us and it would enable us to get rid of all our credit cards and cancel the overdraft, but my husand isn't sure. We are lucky enough to have a house worth about 400k and our mortgage will be paid off in 6 years.
I think i'm just looking for a bit or reassurance in that we're doing the right thing........ and has anyone gone down the consolidating and upping the mortgage route then regretted it?
Cheers:o

frazzmunch

oh how i wish i hadn't done that!!! i did a similar thing myself many years ago...had a 40k mortgage and lots of unsecured debt....basically, i got a first plus loan to consolidate, then decided to pay that off by upping my mortgage...sounded great but....

i was stupid...ended up running up another huge amount of unsecured debt and then illness prevented me from keeping up payments...i now have 3 charges against my property and massive amount of debt....yes, entirely my fault but doesn't change my position :eek:

all i would ask is .....do you trust yourself not to get into debt again? if not..don't do it!!!

shezza

Hi, we did something similar about 4 years ago, and paid off a £25K loan with the mortgage, we didn't learn a thing, and due to OH being really ill a couple of years back we are in exactly the same position again and looking into a DMP. If you know you are not going to run up the debt again, I would say go for it it is definitely better than a consolidation loan, but if you think that you may end up in the same position in a few years time have a look at a DMP instead. On another note, I think your mortgage payment of £500 is really high on a £37K mortgage. I pay about the same on a £80K mortgage. I would be looking at a different mortgage company if your deal is coming to an end, you should be paying at least £200 a month less than you are.

reckyroo

Hi
Thanks for your replies - I know we wont run up the same amount of debt again - some of our debt was due to increasing bills, but to be honest most of it was due to renovains on our house, which is now almost finished. To be honest, i dont drink,smoke,shop (I hate to shop) and am ruthless when it comes to spending (or rather not spending as is the case!), and as we were paying off just the minimum payments each month, dont see that we had any other option. I have been paying off our bills and have currently got rid of 3 ccards this year (I was always tempted by the 0% offer) and cancelled those but will definitely heed your warnings and as soon as the money comes through, cancel the cards!
I can honestly say that I am looking forward to a debt free life in 6 years when the mortgage is paid off and that is enough of a buz to make sure we dont use ANY credit cards again.

rubydoiwannabee

18K unsecured debt, with min payments of £800 pm seems extortinate, what APR's are you paying? Why don't you try and restructure your unsecured debts onto lower or 0% aprs. Six years worth of £900 per month is £64K ish, (nearly 10K interest) surely it would be cheaper to lower you interest rates on your cc and od etc. rather than paying a rate on the whole mortgage amount.

GeorgeUK

You are turning unsecured debt into secured debt. This is rarely advised.

Is it not possible to get another card at 0% to pay off the higher interest debts and possibly use your existing cards with a nil balance to get an existing customer offer to do a balance transfer with?

If you put the details into the snowball calculator, you will see how much interest you are paying and when your debt free date may be. Getting 0% deals may require more management on your part but it will be cheaper in the long run. If something goes wrong later then you may be able to manage your existing mortgage debt. If you can't manage the card debt as well then you won't risk losing your house over it if the debt remains unsecured.

It may be worth doing the figures for the various scenarios and seeing which are more expensive and if the extra amount is worth the risks involved.

https://www.whatsthecost.com/snowball.aspx

Have you posted up a SOA? There may be other areas you can save on in your daily expenditure too.

kalojac

We did that earlier this year we had £42,000 of debt, and got full and final settlements for £28,500, and swapped our mortgage from a £29,000 to a £68,000. We did some renovations with the remaining money. I would agree with everyone else though, your mortgage payments seem so so high. They are double mine when my mortgage was at the £28,500 level my payments with Abbey were £273.00 a month, they are now £436.00 but this is interest only, because of our bad credit rating, we thought it best to do this for 2 years until the term is up and then hopefully get a better deal on our mortgage then, we had 16/25 years left on our mortgage but when the deal is up we are hoping to take the mortgage over 14 years so that our mortgage is still paid off when we are 44 years old. Good luck, but like everyone says its only an option if there is isn't a chance of running up debt again. HTH. Kalojac

reckyroo

Hi
I know he mortgage payments seem steep, but that because we have reduced the entire term of the mortgage to 6 years - after this 6 years, the mortgage is totally paid off.
My husband has just cut up his credit cards - a massive step for him - he has always bought on credit - his family have used credit all his life so it was a bad habit he grew up with but mine havent so any debt at all makes me very nervous.
I have been paying off cards by switching to 0% deals but as we pay one off, the interest on others are more or less negating any positive payments we are making.
Here's to the next 6 years when we will (im determined) be totally debt and mortage free.