pay off debts by increasing mortgage????

shell2400

Hi, please help! after 4 years at uni I now have around 10,000 worth of debt currently on various credit cards. As i have a small mortgage (around 40% of the value of my property) i am considering paying off the debt by increasing my mortgage. Is this the best way to go about things? i'm relatively clueless when it comes to mortgages etc! thanks.

SouthCoast

Visit the Debt Free Wanabee Board where you will find that turning unsecured debt into secured debt is not advised.

I_know_my_ABC_and_my_CMYK

Never ever secure debts on your property. If you get into difficulties with paying you could end up losing your house. As SouthCoast has said visit the debt free boards and post your statement of affairs for help on reducing your outgoings and debts.

beecher

Yeah go onto Debt Free Wannabee and get advice on how to cut back elsewhere and target the credit cards according to how high the interest rate is. Not only would you be risking your house, but you can easily slip into a cycle of debt where you build up credit card debt and then get loans to pay them off.

shell2400

Thanks for replying, i'm confused though. I guess what i was thinking was that my mortgage company could release 10,000 so i can pay off my cards myself as i own a large chunk of the property, and it wouldn't affect my mortgage payments that much over the next 20 years

supersunshine

I see what you mean here Shell2400 and would personally do what you are saying as the interest rate you pay on a mortgage is way lower than on credit cards etc. You have to take into account however that it will be over a lot more years so it may end up more interest in the end. I would only suggest you do that if you are very good with your money and are sure you can pay your new monthly mortgage amount per month and take into account that interest rates may go up.

Could you not have all your balances transferred to a 0% card for a year and try and pay off as much as possible per month and then look into adding the remainder to your mortgage at the end of that time?

shell2400

i'm only working part time at the moment and so don't earn enough to be elligible for another card at 0%, thanks for the advice it makes sense.

I_know_my_ABC_and_my_CMYK

If you are only working part time could you manage an increase in your mortgage?

Pleaseadvise

Shell2400, I asked a question very similar to yours not long ago and we went on to get a further advance and clear our credit cards. So far I can't see any disadvantages. We were paying £250 on our credit cards each month and £360 mortgage. Now we pay £414 for the mortgage + further advance and don't owe the credit card companies a penny. We were only paying the minimum so it would have taken about 20 years to pay off the credit cards anyway, plus we had nothing left at all at the end of each month, so any unexpected expenses would have meant putting even more debt on the cards! With our lower monthly payments, we can save a bit for unforeseen circumstances, and after that if we are able to pay extra on the further advance to clear it sooner, they won't penalise us.

We had tried to transfer our debt to 0% cards. We tried 2 companies and both said (paraphrased) after they sent us the 0% offer and we tried to accept -
"We've thought about it and decided not to let you have that offer after all. We'd be happy to lend you a lot more money at our usual rate though. Then you can have twice as much debt!"

We decided not to accept this generous suggestion.

ANY_CHANCE

We remortgaged to pay off card debts, the thing is we built up more debt.
So as long as you are sure you wont build up anymore debt?