Advice needed please

smitheim

Hi Guys, hope you don't mind me looking for advice again I have had a look through some posts to see if I can contribute in any way but haven't found any that I know the answers to yet iyswim.
We made an appointment with cab some 3 weeks ago, and filled in a form for welsh water customer fund to hopefully clear some of those arrears I brought our cc statements etc along but the advisor didn't have time to go through it all so he said he would make another appt for us with a view to freezing interest and arranging affordable payments but haven't heard anything yet still not sure if this is a good idea - will they (creditors) agree or want to take some of our equity?
In the meantime my bank (natwest) asked me in for a review of my account, and after going through all info inc debts they want to offer us a remortgage, adding 20k to current mortgage amount (to make 77k) to clear all debts inc oh's od, leaving 2k or so to buy a car and 1k to keep in savings acc as a buffer. We have an appt with them next Tues. Sounds ideal, and I would happily cut up all cards BUT interest rate would be higher than current deal (3.59% as opposed to current 1.39 we are on with ing) Than again, as cs lady pointed out, some of our cc rates are horrific, and I could be paying min amount to egg for yaers and years before clearing it :eek: any help/advice much appreciated
Thank you in advance x

Tixy

Hi again Smithem

Well obviously we can only give advice and you have to make your own decision but generally the advice on here is not to go down the route of consolidating your debts and especially not moving unsecured debts to secured debts.

The reasoning behind this is should you have a change in circumstances (lost job, unable to work through ill health etc) then your house will be at a much greater risk. Also bear in mind that whilst the debts would be a 3.59% variable it is more than likely that interest rates will increase 5% or more over the next year or 2. Which would put you up to a much higher rate. In addition how long would the extra mortgage be paid off over? if you are paying it off over a long period of time then whilst the APR may be lower the total interest you pay could be more over the whole period.

Back to your first point. On a DMP it is possible for a creditor to still decide to take your to court (certainly doesn't happen to everyone/ or even that many people at all) and if they got a CCJ that you didn't keep up with repayments they could then apply for a charging order. Even if they got that (secured on your equity) its still exceptionally rare for a judge to grant a forced sale to force you to release the equity (almost unheard of), so whilst you ask if they will want to take your equity, this is a long way off and only a minor possibility, whereas if you chose the remortgage route then you are definitely giving away your equity.

Anyway thats just my thoughts. I would exercise caution and remember that natwest are not unbiased in the advice they are giving you - truly they are looking after their own interests before yours.

smitheim

Hi guys, I have very much valued your advice :kisses3: now please don't be cross with me but we asked again at ing re remortgaging, after natwest advisor (very honestly I thought) said that's what she would do as she could not beat their v low rate - they have agreed to additional borrowing to take mortgage up to 75k, keeping original 57k at 1.39% and additional 18k at 3.5% - meaning we have enough to clear all ccs etc and enough for a more efficient car. We got the offer through on fri and typically have been phoned by CAB today. I told them the situation and they say they may still be able to help by negotiating full and final offers to creditors.
Does anyone think this is likely to work bearing in mind that we haven't actually defaulted?
I really have taken in everyone's advice, it's just that this offer was too good to refuse - we can make flexible overpayments as standard payment will only be £298. If we could clear debts with say 90% f&f offers that would be great as could throw a bit more into mortgage then too x

RAS

Hi

I still would not recommend this as you lose your home if you fail to make mortgage payments, which is not a risk if you default on unsecured debt.

However, if you fo it, you MUST cancel all your cards and catalogues and agree together never to open another one again. everything has to be saved and then paid on debit card.

Other wise you will be back in two years with 73K in mortgage and another £15K in unsecured debts. Promise, because we have seen it here time and time again. Nationally the figure for failed consolidation is at least 85 per cent.

RAS

I assume that the extra £3k it to fund a car?

Have you put what you will be paying off over the next 20 years into the snowball on www.whatsthecost.com?

Toni_Broke

Hi
I am in total aggreement with RAS, I have done this twice before and still ended up with credit card debt. Please think about it long and hard especially as you indicate that perhaps your other half hasnt quite had his LBM.
Good Luck
Toni xx

smitheim

Thanks guys, I really appreciate you taking the time to reply. I have already sent the deed back though so we are committed aren't we? I really get your point about the cards, I'm happy to cut mine up but oh wants to keep one :mad: will change his mind though...
What really scared me about the iva/dmp route was that they would take our equity anyway and we could have ended up paying fees etc.
Does anyone know if it's likely we'll be able to negotiate full and final settlements as cab seem to think? ty in advance x

RAS

Hi

You have already effectively taken your equity away by re-mortgaging to cover your unsecured credit.

And you will in the long term end up paying back a lot more than you borrowed, because the capital will accrue interest for the next 20 years rather than say the next 5 years.

10past6

I'm posting this for those browsing this thread, it's never a good idea to borrow your way out of debt, especially when it comes to turning an unsecured debt into a secured debt, this really should be a very last resort, if it cannot be avoided, one should always seek an independent FA rather than a bank employee who are under target driven stats.


For those experiencing financial difficulties there are a range of options open to them, one being, use the link within my signature.

smitheim

Ok, I'll just slink away and make a hat with a D on it