adding debt to mortgage

dave73

looking for some advice i have 45k of debt on loans and credit cards i was thinking about adding it to my mortgage which has 17k outstanding whats peoples views on this i was thinking it would be lot easier for me just the one payment to make each month.

Jesthar

Hi Dave,

Turning unsecured debt into secured debt is NEVER a good idea. If you fail to keep up payments on cards/unsecred loans, the worst that can happen is a trashed credit rating. If you fail to keep up payments on debts secured on your house, you could lose your home...

It might take a bit more managing, but keeping the debt unsecured is the way to go.

~Jes

black_taxi_2

is credit card/loan debt mainly with 1 firm

offer to pay 50% of total debt in a oner provided they right off whole debt--get it in writing.then get bank loan using equity in house, to pay it off

you will be surprised how much firms want debt off there accounts

Fortheloveofmoney

I agree with Jesthar

On my debt free journey I did add 9K to my mortgage just to free up some monthly payments to snowball the other debt. I only did it after some careful calculation though and knew I had the means and commitment to pay off the rest and then overpay the mortgage. I'm not in any worse a position with regard to mortgage now BUT that is only because I've overpaid.

Please be very careful about doing this as it's easy to just add to the mortgage and then carry on as you were before. After a while you may find that you have the extra 45K on the mortgage and have racked up more debt as you may still be living beyond your means.

dave73

i was thinking it would be the easier option just now im paying out just over £1300 a month on debt and mortgage but if i put it all together its going to be £500 odd a month but i know thats over a longer period but my plan was just to keep paying extra to clear it quicker

Jesthar

It does sound tempting, doesn't it, but what happens if, say, you lose your job? If all that was unsecured debt, you could make token payments whilst you found employment, but with secured debt it's not so easy to do that...

And, also, it's very easy to forget about the overpaying and spend the 'extra' cash you then have if you're not very careful!

Could you perhaps post up a Statement of Affairs for us? It's a sort of sumary of your current financial psoitioin, and the people here are great at helping people to budget and pay off debts faster - our favourite calculator is here;

http://www.makesenseofcards.com/soacalc.html

If you use the 'MSE' button in the 'Format' section, you will generate a version you can simply copy and paste into a new post here.

~Jes

Fortheloveofmoney

Have you checked out the snowball calculator? http://www.whatsthecost.com/snowball.aspx

This will tell you how much extra you will pay in interest if you add it to the mortgage.

You can also play around with this to see what the cheapest option will be for you. It's how I worked out what to do.

anh1904

Depending on the interest rate of the existing unsecured debt, and the ability (terms and conditions) of the mortgage in terms of overpayments then it could add up to quite a saving if you are happy to maintain the same existing debt servicing payments.
However, what everyone says about unsecured debt not costing you your home is also relevant in todays economy, so do some thinking.

Ames

Also, if you have to claim benefits for any reason, they'll only pay the interest on the original mortgage, not anything added for debts.

dancingfairy

I think it's too easy to just add it to the mortgage and think problem sorted and carry on as before. Only you know what the money was spent on and whether the underlying problem has been dealt with but think it all through carefully and do the sums - the monthly payments might go down but how many years will it take to pay off? and how much more interest will you be paying?
There are other options out there.
df

anh1904

Car insurance £98 per month?
Car maintenance £300 per month (that's £3600 a year?)

Check your figures please, they seem WAY too high?