Halifax further advance

weebubbles

Hi, I have just applied for a Halifax further advance. My mortgage is £61000 and I have 20 years left. I have asked for an extra £4000 to pay off 3 credit cards (Barclay card £640, M&S £1450 and Lloyds £1750). This will leave me with a sainsburys loan of £9000, a saisnburys credit card of £4100 and an overdraft of £1500.

According to their calculator it will be an extra £27 a month. Just now I pay £90 minimum payment to all 3 cards so will save £63 a month.

Have I done the right thing? I am worried that I haven't. I am 7 months pregnant and trying to sort out my debt before the baby is born.

Also they say that they will phone me (as it was an online application). How long am I likely to wait and as this is a joint application will they want to speak to my husband?

Thanks

Trying_to_be_good

For a joint application you'll both have to sign the paperwork.

You'll save on your monthly outgoings, but be aware you'll pay MUCH more in the long run as you'll be paying interest on this for the 20 year term of the mortgage, and have turned an unsecured debt into one secured on your house. Hopefully you considered all this before applying?

Well done for trying to sort this out - have you tried the DFW board,a nd posted an SOA to see how they can help you get bills down? I'm sure they could offer loads of help, as money will be tighter with the new babe. Give them a try - they're great!

weebubbles

I have thought it through that this loan will be secured on my home but as it is £4000 and costing me £27 I cannot see myself not being able to pay this £27 a month if something was to happen whereas I could see myself not being able to pay the £90 minimum repayments on my credit cards if something was to happen.

With this further advance I will pay a total of £2410.40 (based on the interest rate of 5.14% that I asked for). This is fixed for 5 years and yes will probably go up after the 5 years is up.

If I don't take the further advance and keep paying the minimum payments on my cards (I cannot see myself being able to pay more than the minimum payment) then i will be paying a total of £6520 in interest and will take longer to pay off than the further advance:
1. M & S for the next 25 years and 11 months and a total of £2122 in interest
2. Lloyds for the next 27 years and 10 months and a total of £2590 in interest
3. Barclay for the next 26 years and 2 months and a total of £1808 in interest

I hope to move house in the next few years and when I take out a mortgage for that would I be able to add this £4000 to that new mortgage? or will I always have a mortgage and then this £4000 separately. Also when the 5 years is up and I have some money then I could reduce the £4000.

Maybe I am trying to convince myself that I am doing the right thing.

opinions4u

Given the baby etc I'd say taking steps to reduce your interest rate and monthly payment makes complete sense. So it's a good call (despite the extending of the term and the additional interest that may cost you in the long run). Is there any reason you didn't get rid of the overdraft and Sainsbury's card? I'd be particularly cautious about maintaining an overdraft on a reduced income because banks have become exceedingly good at withdrawing the facility at a few day's notice and asking for full repayment.

Although the Halifax system will manage the loans (mortgage and further advance) separately you will only see one monthly payment collected.

If you move house, both the original mortgage and the further advance are repaid out of the sale proceeds. You then start again with a single new mortgage.

Hint if you can afford it: Save the £63ish a month saved somewhere and only dip in to it for genuine dire emergencies. Aim to build up a decent lump sum with it and each time you hit £1,000 make a decision as to which debt you wish to repay (or treat yourselves with £200 and repay £800).

temba

I think you've done the right thing. If you find yourself having the extra £63 a month spare then you could always overpay your mortgage with it until you get it down to the amount it would have been anyway. This will be a much more managable way to pay off your credit cards I think.

With baby on the way then I think you are absolutely right to get your monthly outgoings as low as poss.

dimbo61

What you have not taken into account is the LTV of your mortgage compared to what your home is now WORTH !
You have other debts and are about to have a big drop in income ? and may be off work for some time or paying child care costs !!!
What you and your other half need to do is look at what you are sending each month and how much is coming into the home ( you also need to cut up the credit cards! )
If you have not got the cash you cant afford it and more than likely dont need it
Look on the debt free board GOOD LUCK with the new baby.

weebubbles

My only hope is that they give me the money now! but me and my husband earn £2500 a month after tax between us so hopefully they will realise that we can pay £26 a month. Also had to say what I would use the money for and what cards would be paid off.

Hopefully I should hear soon

weebubbles

dimbo61 wrote: »

What you have not taken into account is the LTV of your mortgage compared to what your home is now WORTH !

My house is worth £85000 and I owe £61000 and then will have the £4000 so in total will owe £65000and the LTV will be 76% with the further advance.

With both our salaries the halifax say they are willing to lend £130,000 on their mortgage calculator if we were to take out a new mortgage.

thriftymomma

I think you've done the right thing. Switiching your debts to the lowest interest possible is what Martin would advise after all. Good luck with your new baby!