Help! Debt consolidation - Loan / Mortgage ???? Have I messed up my credit???

earthquake

Hi All,

Firstly let me say Hi as I'm new here!
I need help!!!
I've got about £21,000 on 3 different credit cards! These were banged up mainly due to a new kitchen & batroom for the house but I also have to admit to being a bit frivolous along the way as well!
Recently they've been getting me down & it's now got the point I just want rid of the little !!!!!!s!
This week I decided to do it by way of a loan over 7 years! I applied for one with one of the big supermarkets & it was approved but not at the lovely low rate they advertise on the net but all good!
Yesterday I then decided I would try another lender to see if they would offer me a lower rate but this one was refused!
Is this because I had applied for one with someone else???
After stressing all day about this nightmare I have now decided I would rather just borrow this amount as an add on to my mortgage!
I have quite a large chunk of equity in the house (about 45% of the value) so it would just make the payment easier to manage.
Now however I'm worried I've ballsed up my credit rating with these 2 loan applications & this will affect the mortgage application!
Any advice would be really helpfull.
Sorry for the long rant but it's all so complicated.

GeorgeUK

Don't try to get any more credit.
I'll post more in a bit...

bargainbetty

OK, start from the beginning.... most people on here would advise against consolidation for the simple reason that you won't learn from the mistake and will run up debts again.

Before you think I sound patronising - I did it. Twice. So there : )

OK, if you haven't taken the money yet, give yourself a bit of time. Post a statement of affairs on here and the lovely bods will help you look at your income and expenditure and see where your money is going. You can cut back on wasted money first, rather than borrow yet more debt.

Why not call the card companies and see if you can haggle a lower interest rate. Do you have enough credit limit on one to transfer one out and then back in to take advantage of balance transfer deals?

If you aren't getting a good interest rate, can't pay off extra debt the way you can with a card and don't get a handle on your finances, then getting a loan will be pretty pointless, except for the bank who will love you for it.

Don't apply for anything other loans just yet - it may be that you have put a blip on your rating, but taking the high priced loan will make it worse. Cut up the cards you have so you can't spend more on them, and then hunker down!

Work with what you have. Try that first, and you may be amazed at what you can do.

Good luck x

GeorgeUK

You can have about 3 credit searches in a 6 month period before your cerdit score is affected. Do not apply for any more credit. When do you need to remortgage?

There are a few other ways you could try to reduce the outstanding debt. Once you have less credit checks on your file (in about 6 months), you could try applying for a 0% creditcard. This will mean a reduction in the interest you are paying which will reduce the debt quicker. I would rather do this that get a loan or consolidate the debts.

You could post up a statement of affairs and we'll see if there are savings to be made from your current expenditure.
http://www.makesenseofcards.com/soacalc.html

If you concentrate on paying the minimum to all cards and throwing anything left at the highest APR, this should also allow you to reduce the debt quicker. Have a look at the snowball calculator https://www.whatsthecost.com/snowball.aspx?

If you can clear one of your cards, you may also be able to get an incentive to keep the card open - 0% for 6 months or low interest life of balance. This won't require a credit check.

earthquake

Thanks for the replies.
Here's my statement of affairs -

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1650
Partners monthly income after tax....... 0
Benefits................................ 230
Other income............................ 0
Total monthly income.................... 1880

Monthly Expense Details
Mortgage................................ 655
Secured loan repayments................. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 123
Electricity............................. 47
Gas..................................... 75
Oil..................................... 0
Water rates............................. 25
Telephone (land line)................... 30
Mobile phone............................ 20
TV Licence.............................. 12
Satellite/Cable TV...................... 36
Internet Services....................... 0
Groceries etc. ......................... 300
Clothing................................ 0
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 159
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 30
Contents insurance...................... 0
Life assurance ......................... 40
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Gym..................................... 44
Total monthly expenses.................. 1596

Assets
Cash.................................... 0
House value (Gross)..................... 260000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 260000

Secured Debts
Description....................Debt......Monthly...APR
Mortgage...................... 150000...(655)......4.99
Total secured debts........... 150000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card....................8200......190.......0
Credit Card....................5500......25........0
Credit Card....................6900......150.......14
Sofa...........................370.......37........0
Total unsecured debts..........20970.....402.......-

Monthly Budget Summary
Total monthly income.................... 1,880
Expenses (including secured debts)....... 1,596
Available for debt repayments........... 284
Monthly UNsecured debt repayments....... 402
Surplus(deficit if negative)............ -118

Personal Balance Sheet Summary
Total assets (things you own)........... 260,000
Total Secured debt...................... -150,000
Total Unsecured debt.................... -20,970
Net Assets.............................. 89,030

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

======== Enter any other useful information below ========

e.g. the number of adults & children in the household, the number

of cars included in the SOA or anything else that may be useful.
I'm married & my wife is a full time mum so we're a 1 income household at the moment. My youngest has started school this week so she is going to get a part time job ASAP, so that will help considerably.
We have 2 kids.
I have to re-mortage in June anyway but my mortgage man said he would start proceedings at the end of Jan.
My reasoning for clearing this debt by increasing my mortgage is purely due to the fact the monthly repayments would be a lot less i.e repayments on extra £20,000 on mortage would be max £200 where as at the moment I'm paying back £35 across the 3 cards.
My other worry is one of these cards is a Virgin card where the 0% runs out in Feb so God knows what that minimum payment will turn into (at the moment it's just £25 per month!!)
Once again thanks for any help!

GeorgeUK

The only thing wrong with putting it on your mortgage is that you are turning unsecured debt into secured debt. If you are comfortable doing that then fair enough.

Council tax............................. 123
If paying over 10 months, can you ask to pay it over 12?

Electricity............................. 47
Gas..................................... 75
WOAH!!! Look at some of the comparison sites to see if you can get a better offer (uswitch, moneysupermarket)

Mobile phone............................ 20
PAYG?

Telephone (land line)................... 30
Satellite/Cable TV...................... 36
Internet Services....................... 0
Are these combined in a packeage?

Groceries etc. ......................... 300
Have a look at the old style board for meal plans etc. Have you moved down a brand (shops own)?

Any extra money i would throw towards the card that has the highest APR and just pay the minimum to the others. Hopefully you will be able to clear it and possibly get an offer to keep the card open. You can have about 3 credit checks in a 6 month period so you probably shouldn't do any until the mortgage is sorted, but you could try getting another 0% card if the remortgage rate is more than you are hoping for.