Loan or adding to mortgage?

audz48_2

I have 3 credit cards totally £5,000 and paying interest on them all.... is it better to take out a loan, say over 3 yrs or add it to my mortgage. I am 48 yrs old and only about 20k equity on my property. Thanks

[Deleted User]

cant you transfer all or some of them to 0% c/cards and get them paid off?

audz48_2

Ive tried to transfer to a o% card but have been refused twice. As far as i am aware i have a good credit rating, im checking with Equifax at the moment.

tyllwyd

You only have £20K equity in your property? I don't know, but I'd have thought you'd struggle to remortgage and reduce it even more.

Putting that to one side, you need to look at the figures.

If you remortgage, what period would you be borrowing over? What would the arrangement fee be? What would be the interest rate compared to what you are paying now. You need to find a mortgage calculator, and put in the figures to find out the total interest you will pay on your mortgage if you stay as you are or if you remortgage.

If you continue paying the credit cards, how much interest will you pay before you get them paid off? (have a look at the snowball calculator on the what's the cost website)

If you get a loan, what interest rate are you expecting to pay? How much will that cost you in interest?

I'd be really surprised if adding the debt to your mortgage was the best option out of those three. If you are struggling to pay your cards, why not have a look at the debt free wannabee board, and do a budget (soa = statement of affairs) to get a realistic picture of where you are at the moment.

Rafter

Given the sums involved and the amount of equity you have I suggest an unsecured loan or even better a money diet and snowballing would be your best option!

Snowballing means cutting down on spending, maximising your income and paying off your most expensive debt as fast as possible, and then re-investing the interest you save into paying off the next most expensive debt.

You might want to consider filling out a statement of affairs on the attached sheet and posting on the debt-free-wannabe board for further ideas.

If you haven't already done so, sign up for quidco and switch your electricity, gas, insurance etc to get much better deals there.

Good luck

R.

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