Should I increase Mortgage to pay off overdraft

killerk55

Hi ,

My partner has a £1300 overdraft with Halifax , as some of you might know halifax has changed their policies latley where they will charge you £1 a day if u ar in their overdraft.

She lives out of her overdraft and cant really afford the extra £30 a month

Would you recomend increasing the mortgage by £1500

Are there and reasons why not to do this.

Reason behind doing it would be that in her posistion now she will be paying the £30 off without getting rid of the overdraft.


Any advice is appreciated

Anastasia

It's never a good idea to turn short term debt into long term debt.

How about doing a balance transfer onto a credit card with 0% APR? There will be a fee to pay up to 3% usually but this is added to the balance.

If she normally lives out of her overdraft then she may need to monitor her spending and look at ways to save and earn more money to pay the debt off.

killerk55

Thanks for the reply , a credit card with a 0% is an option , however Im not sure if she can now be accepted for a credit card

Does bank do similar option from where they will transfer over the balance into their overdrafts

shes in a catch 22 situation , earns enough to pay everything off that needed but not for anything else , and with halifax doing this with overdrafts its impossible

and it doesnt make sense to pay £30 to them a month when you could do same with loan but have it cleared

CLAPTON

are there any costs / fees in increasing the mortgage by 1,500?

killerk55

Shes only spoke briefly to advisors , Im the one whos being cautious regarding and said id find out first .

They did say would be and extra £11 a month for 15 years , a long time however that comes to £1980

and that £1350 she will be taking out extra . Im under the impression there is charges but I dont know what exactly .

But Im not sure .

kriss_boy

I think if you are both honest with yourselves you'll be able to knuckle down and clear the over draft in 4 or 5 months.

This board is full of excellent money saving tips that should earn you a few quid.

opinions4u

killerk55 wrote: »

My partner has a £1300 overdraft with Halifax , as some of you might know halifax has changed their policies latley where they will charge you £1 a day if u ar in their overdraft.

She lives out of her overdraft and cant really afford the extra £30 a month

The first thing to do is to get the account change to a Reward account to make sure that she earns the £5 Reward back each month. That reduces the net cost to just £25.

Would you recomend increasing the mortgage by £1500

No. I'd recommend finding other ways to manage the debt down as quickly as possible. Spending less for a few months, for example. Don't bang that debt over 15 years though.

I wouldn't normally suggest some of the things listed below for clearing an overdraft, but the Halifax charging structure is an unusual one.

- move the account to another bank that only charges interest, not a relatively high daily / monthy fee.

- get an overdraft on your account at a different bank and pay off your partner's overdraft with it. Tell you partner to pay you the interest and to never go overdrawn again!

- move normal expenditure on to a credit card for a month or two and carry the debt on the credit card. Espeically if you can get a 0% purchase card!

- above all, take a look at the Debt-free Wannabe part of the forum and set yourselves the goal of being overdraft free within a few months (I'd suggest 6, but you know your family finances better than me!).

Good luck!