Should i get a loan to pay off cards?

Gaz51

Hi everyone, first post so please be gentle.

I'm after some advice really.

I currently owe about £10000 on 3 credit cards, i'm paying the minimum amounts at the moment which is coming to £253 a month. I'm thinking about getting a loan (not a consolidation loan, just a normal unsecured loan) to pay off these cards and having looked around i should only then pay around £200 a month for five years then the debt is cleared. I have a pretty good credit score of around 940.

One of my main reasons to do this is that my wife and i were recently turned down for a mortgage due to the fact that she is currently on a DMP and my credit card debts. I'm hoping by paying of my cards that in a years time we should be in a much better financial position to get a mortgage.

Does anyone think this a good idea?

Thanks everyone. (i love this site by the way, loads of great tips)

CHR15

Good idea in priciple but there are things to consider.

When applying for the loan the bank will look at your current debts. They won't assume the new loan will pay off your current debts.
So if you ask for £10k, they will add the existing £10k to give you a new debt of £20k, how does this compare with your salary??

It may be that the £20k is considered too much debt for you to service so may reject you.

It may also be that they will inflate the APR on your loan as you will be a higher risk to default on the repayments having so much debt already.

The bank can't stop you running up another £10k on your cards once you have cleared them using the loan.

Good luck but there may be hurdles ahead.