Checking that this secured loan consolidation look ok!

gprops22

Hi there,

I took out a Santander mortgage 1 year ago for £139k and gave a £70k deposit on the £209k house.

I furnished the house through credit cards - I have paid off most of this through a bonus received in April although I have £8,000 remaining to pay. I stupidly managed to miss two payments previously on an unsecured Natwest loan due to changing banks and not getting direct debits set up properly and this appears to have severely affected my credit rating as I am unable to get accepted on several credit cards and unsecured loans.

My house has increased in value to £231,000 and Santander are happy to offer me a £10,000 loan which would pay off all credit card debt at 5.99% fixed for 3 years then going to variable rate for a remaining two (five year total term). If rates stayed as-is this would equate to total repayment of £11,600 over the five years which seems very reasonable to me.

I can happily afford the extra £193 per month payment - I will also pay the additional 10% allowed. Monthly interest on this loan would be around £27/month (assuming rates do not go up) and this is far less than the interest I am currently paying on credit cards.

Is there any reason for me not to go ahead with this loan? I am keen to wipe credit card debts and live in the black. I have heard some scare stories about secured loans but even if rates were to increase to 8-9% by year 4, this seems more affordable than an unsecured option.

Am I missing something or does this sound reasonable.

Many thanks

marmitedog

Sounds like you've done your maths. How can you be so precise that your house was increased in value by £32,000 in 1 year though?

gprops22

marmitedog wrote: »

Sounds like you've done your maths. How can you be so precise that your house was increased in value by £32,000 in 1 year though?

That's the "minimum valuation" according to Santander for my house - £209 to £231 is £22k though!