Interest only

LASTDITCH_3

Hello all

I am new to the forum but not new to debt which I seemed to have carried around for 30 plus years in one form or another, always meaning to get a grip. Not making any excuses but often I end up supporting everyone else pretending that it's all alright. The upshot is I owe £39000 more than half being on credit cards, I have a loan at 7% which is paid up in 15 months and costing me £460 per month. I was thinking of going interest only on my mortgage which has only 9 years to run to repay the £500 I would save on high interest CCs each month and then revert back to repayment. I am currently paying £1100 on servicing my debts.
Do I just keep going for 15 months and accept I won't make a hole in things for a while. My plan is to repay mortgage and the lot in 7 years so I can retire debt free with my pension - one thing I have got right.

Any advice


Thanks

Tixy

Hi and welcome

I think its a tough decision. By switching to overpaying unsecured debt and not paying your mortgage capital the downside is that you are (effectively) turning unsecured debt into secured debt, the upside is that you will probably save loads in interest.

Which is the right decision for you is difficult for anyone else to say. I suppose a couple of things you could think about are if base rates increase and your mortgage rate jumps will you still be able to afford to meet your commitments and to meet your 7year plan.
Do you have sufficent equity in your house that should house prices drop again you will still have enough equity should you need to sell/ or remortgage. (I guess you might have if you only have 9years left)
How secure is your income? if you lose your job what would happen, could you cope with servicing the debts? you don't want to jeapodise the roof over you and your family's(?) heads and the more secured debt you have the more at risk your house would theoretically be.

Have you played around with the snowball calculator to get an idea of how much you can save in interest by the different options? (www.whatsthecost.com)

Have you tried balance transfering cards to lower rates - either promotional rates or low life of balances?

Sorry I know I have only posed questions not answers!