Adding debt to mortgage

Beetle_lover

hi, not to sure if this kin of thing even has a proper name but il give explaining it a go!

basically my OH has got a bit of debt, around 11k (loan, credit cards) really want to get it all put into one loan so that he can start paying it off properly.

he seems to think that because halifax made a !!!! up with his credit card and he missed a payment that his credit rating will now be bad and so is relutent to try and get another loan.

his loan and one credit card are with halifax so i think he should go and speak to them and see if they can put everything into one loan.

the other option is to add this debt onto our mortgage but we dont really know how this works. mortgage was £105,000 house is worth £125,000. we have only been paying this for around 18 months.

can anyone help. thanks

milliemonster

Why do you want to keep consolidating all this debt into one loan? all it is doing is shuffling the debt about and not actually achieving anything in paying any of it off. You would be better off heading over to the DFW board and looking at how you can manage your current budget better to actually start paying this off, whether the debt is on one loan or spread across various cards/loans is irrelevant in 'paying it off properly', all you are achieving by consolidating is reducing the amount you pay each month but increasing the amount you owe (in interest payments)

I would never recommend adding unsecured debt onto your mortgage and turning it into a secured debt

Beetle_lover

need it all into one so that we can keep an eye on it better. halifax credit card has a high interest rate, we arent trying to put it all into one to pay less a month, just pay less interest, its hard to keep track when its all over the place.

milliemonster

But by adding the balance of the halifax cc to your mortgage you will end up paying more interest as the debt is spread over a much longer term.

If the CC is high interest, concentrate on throwing all your spare cash at that debt until it is clear, make sure in the meantime you pay the minimum on all the other debts and set the repayments up by DD then you don't have to worry about it.

We have 11 creditors and I know exactly where I am with each of them, which I need to pay off first, which to overpay first and never miss a payment on any of them. I would not consider consolidating all of these into one loan or adding it onto my mortgage as in the long run it does not make it cheaper

Beetle_lover

thanks for the advice but because its not my debt its not that easy to keep track of. my OH wont go for any of that, he doesnt card hop and things like that coz he thinks its a hassle. he keeps going over overdraft and things because these all come out at different times, at least if it was in one that i wouldnt have to worry that he is wasting money all the time.

Wutang_2

Beetle_lover wrote: »

thanks for the advice but because its not my debt its not that easy to keep track of. my OH wont go for any of that, he doesnt card hop and things like that coz he thinks its a hassle. he keeps going over overdraft and things because these all come out at different times, at least if it was in one that i wouldnt have to worry that he is wasting money all the time.

Keeping track of it is far less important than paying way more in interest...get him on this site and tell him to get a grip

milliemonster

Then he's sticking his head in the sand and believe me you will be back here in a few years time when your debt levels have reached ours, until he gets a grip on his finances this spiral of debt will continue despite consolidating.

I don't think it is the debts in themselves that is the issue, it is the lack on control he has over his spending and not living within his means if he is continually exceeding the overdraft, it is this that needs addressing more than shifting the debt.

I doubt you would be able to add this to the mortgage anyway as the LTV would be too high and I can't see any lender taking that risk in the current climate so you have to tackle this from a different angle.

It really isn't too difficult to sit down with all your statements, and a piece of paper and write down the date you get paid, the date each transaction comes out of your account and whats left at the end of it as your free available cash to spend each month.

Trust me, consolidating will not solve his problem

Gorgeous_George

It's called MEWing (Mortgage Equity Withdrawal) or, more accurately HEWing (Home Equity Withdrawal).

There is a myth that adding expensive credit card debt to your mortgage will mean paying more. This is not entirely true in itself. Take the same length of time to pay your credit card debt (at the high rates) as you do your mortage and it is clearly cheaper to consolidate the debt at the mortgage rate. What is missed is called 'Net Present Value'. In short, repayments in the future are not worth the same as 'equivalent' payments today. Excel can help to work out NPV.

I'm not saying that changing unsecured debt into secured debt is a wise move or should be your first choice. However, it is an option that may be available and may be justifiable. For the OP, it is unlikely to be an option due to the LTV.

GG

Beetle_lover

thanks


going to have to do something as outgoings are too much. i really dont want to get a personal loan as it means being in debt for another 8-10 yrs where as if its on to the mortgage it seems easier to deal with.

would i have to speak to the people that i have my mortgage with?

what is OP? and LVT?

milliemonster

Op is Original Poster (ie you) and LTV is loan to value, your mortgage is £105k (which is the loan) to the value of £125k, this represents an LTV of approx 85% already, if you added on the £11k to this it would take the LTV up to almost 95%, I doubt your lender would accept that

Gorgeous_George

Beetle_lover wrote: »

thanks


going to have to do something as outgoings are too much.

Option 1 - reduce outgoings

Option 2 - increase income

Option 3 - move debt to mortgage


Options 1 and 2 involve some pain and involve you taking charge of your finances. Ditching a mobile contract and Sky TV may be a nuisance barely worth thinking about. Maybe getting a spare time job will be too traumatic.

Option 3 lets you play happy families for a while longer but this option disappears in a stagnant or falling market. It may have disappeared as milliemonster kindly pointed out.

GG