Consolidating into mortage

iian

hi

putting in

mountainofdebt

iian wrote:

Hi all

Another newbie (not to debt though) with some questions. I owe around £20000 pounds to cards and a couple of loans (1 of which was to consolidate), anyway thinking of buying a house with my partner which I was going to consolidate the debt with. I know that consolidating isnt good as I have done it before, the main reasoning behind it is that I am a sole trader and pay around £600 per month rent and fees on a property. The houses we are looking at would enable me to work from home and what I was previouly paying in rent would go to the mortage (which will be around £1000 pm).

I am going to give notice to where I am now (I'm on a monthly licsence, my one saving grace) and will be working from where we are currently living, but with no structure as I will be working in the front room.

Any thoughts or advice would be much appreciated.

Ian

Edit: Just to add that I wouldnt be getting anymore loans and the only cc I'll have is my business one which is cleared every month by DD.

this was covered in an article in today's Daily Mail and it stated that although the interest rate is lower, people end up paying more as you are paying the money back over a longer term.

Also how can you be really totally honestly sure that you won't run up debts on credit cards again once you have cleared the ones you have at present.....that false sense of wealth is fatal.....as you have alreasy found out, lol!

Seriously though please think long and hard about this but if you do decide to follow this course of action, one thing the article did recommend was to have a mortgage where overpayments could be made and make the same overall level of payments to the mortgage to the same to the level of payments that you are making now to your credit card to minimise the excess interest that you will be paying.

sparkle84

Maybe I have misunderstood but you can't consolidate loans and cc into a mortgage mortgages are offered on property if you buy a property for £200k put a deposit of £10k and the want to consolidate £20k you are in negative equity!!! It not only a bad idea but its not going to happen - please post back if I have misunderstood your posting

peterg1965

I recently consolidated unsecured debt in a secured 2nd mortgage on my property. I realise that this does not make sense for most people. However, in my defence I carefully analysed how much interest I was/would be paying on my current unsecured loans/cc's (sme APR's were up to 10% on loans and 15% on CC's) and worked out that I would be paying less interest overall. The key here is the 'term' of the secured 2nd mortgage. I elected for a 10 year term starting @ 4.39% interest (tracker rate) and I will also overpay both mortgages (the second is much larger - my original mortgage over 18 years) by £100/month which reduces the term further of the 2nd mortgage by a futher 15 months.

I accept that the risk here is interest rates going up markedly but hopefully this is unlikely. The end result for my for my monthly finances is that I am paying out slighlty more per month which I can comfortably afford.

The message here is that remortgaging to consolidate is not a good thing, however if you play with the term of the mortgage you may maintain the status quo in terms of actual interest paid, or better still, pay less interest.

Chortle_2

well, if I was your gf and was going to effectively give you a big chunk of my hard-earned equity, I'd want a legal document showing that you'd had it, just in case things don't work out, and we split further down the road.

I realise that you're already committing yourselves to one another financially by getting a mortgage, but that is a lot of money to bail someone (even a partner) out with, and especially as there is no evidence I can see that you'll definitely change your ways iyswim. Most of us have got to the level of debt we have by taking the 'easy' option and consolidating, or being bailed out by someone, and then racked up more debt on top. I've come to the conclusion now that without the work of truly paying debts off bit by bit, and struggling to do so by cutting back, missing out on life's luxuries etc, I for one will never truly learn that there is no easy answer! Good intentions are wonderful, and I've said countless times "never again" as my parents bailed me out/the consolidation loan came through, but I still managed to get up to over £41,000 in debt. I know I am not the only one - can you honestly say that you're any different?

Personally, I would never let anyone bail me out again - this is my mess, I'll fix it. I certainly wouldn't want someone that I loved to put their own financial security on the line to make my life easier.

If you're going to do it, be very, very careful. And your partner should be even more careful imho!