New User - Please help

Scoops

Hi guys

Hubby and I are stuck at a bit of a crossroads and have had conflicting advice.

We currently owe £32,000 as unsecured debt (loan and CCs) and have a £100k mortgage on a house worth approx £118k. £20,000 of our debt is an unsecured loan with Northern Rock as part of our Together mortgage with 23 years left to run. The remaining £12k is split between 4 CCs (remnants of wedding expenses and overflow from my H's 5 month redundancy last year:eek: )

We want to move to a larger house and are looking to borrow 95% of £125k.
Affordability calcs from 2 lenders (Halifax and Nationwide) indicate we'll be able to borrow £187,000! Waaay more than required!

We've seen 3 financial advisors; 1 was a true independant and the others were linked to EAs (Halifax etc)

Independant guy has looked at all our debt and recommended we use the ca £15k equity in our house to offset the ccs and part of the NR loan then remortgage on the new home with NR and borrow a total of £137k on a house worth £125k. The figures all add up and it comes to £50pcm more than we are currently paying for our mortgage alone (high interest atm) This would wipe out all our debt apart from the small amount left on our car loan BUT we would need to make overpayments of around £150-200 per month to have a hope of paying off the debt to NR.

We can easily afford to do the above but are hesitant because this is exactly what we did 2 years ago when we bought this house and we don't want to go backwards again. We borrowed £121,000 on a house worth £106,000,(Fixed rate interest for 2 yrs at 6.59%.) cleared the cc debt and my remaining student debts then ran it all up again when my husband was out of work for 5 mths. Aaaagh!

We have learnt a lot from our previous mistakes and can see that the NR route would be a good option, particularly when you factor in the 8% APR loading we'd get on the loan if we moved our mortgage away from NR:eek:

The other two FAs recommended using £6k of equity as a 5% deposit then using whatever was left to pay off the CCs. Problem is the NR unsecured loan would still be sitting there at 14.9% APR and we wouldn't have a hope of getting a personal loan to cover it with affordable repayments. Currently pay £147pcm for the loan part and £706 for the mortgage. Loan payments would jump to ca £260pcm!

We are much more disciplined now with our money and will NEVER let that happen again BUT it does seem like taking a step back.

Net income- £2700
Mortgage - £706 6.59% APR
NR Loan - £147 6.59% APR
Car loan - £151.16 (not sure of APR, think around 7%)
Min payments to 4 ccs -£260
Barclaycard £3594.90 APR 21.0% min £72
Egg card £1768.12 APR 15.9% min £36
Tesco CC £2348.61 APR ~13% min £80
Halifax cc £3625.82 APR 9.9% min £73.29
Groceries £250:eek:
Other living expenses approx £700 including heating, water, Council tax, insurance, petrol, phone and internet. (Have most likely over estimated this part, will get proper figures later today.)

Budget calculator puts us in the green (by about £100) but we want to be able to live our lives too!

Has anyone been in a similar situation or have any pearls of wisdom to offer?

Edited to add:
We want to move to a 3 bed home and then not have to move for 5 years, so staying put isn't really an option. Houses around us are anything from £115k upwards so we are looking at the bottom end of the market and can't afford to live in our preferred area. I have had to compromise on that as the 3 bed home is so important to me.

Snowballing all debts including the NR loan at £600 per month means we'll be debt free in 9 years. We still intend to follow a strict path to pay off this "new" loan as soon as possible, we want to be mortgage free in 15yrs

dlb

I know someone on here will be able to help you.
They help me loads
Sorry cant help you personally
Someone will post soon who can

In_Search_Of_Me

Am sure someone with excellent money advive will be along & suggest you post your SOA. However, I personally would want to reduce debt before even thinking of taking on more but thats because I'm a debt free wanabee!! Not a great one at times! Perhaps someone will suggest differently but I would be inclined to pay off existing debt first. Sorry of its not what you wanted to hear! Hope you find the answer thats right for you!

Scoops

Fishface-
Staying in this house isn't really an option for me as I am so unhappy here it is affecting my health. Long story that I don't really want to go into but we have decided to move as long as we don't go over the 125k mark. Evil stamp duty etc!

We could be looking at 4bed detacheds but would be paying £1190 mortgage every month PLUS all the other debts and expenses! How the FA's got that to be affordable I'll never know? What if the interest rates go up again?:eek:

Thanks for the support guys... do you think it might be better in the mortgage forum as it is really a discussion about which type of mortgage to have?? Confoosed!

CLAPTON

just a couple of questions but no pearls of wisdom i'm afraid.

over the last year, on a month by month basis, how much has your total debt decreased?

you say I quote 'Budget calculator puts us in the green (by about £100) but we want to be able to live our lives too!'

are you saying that a 100 spare each month is insufficient to have a life or are you saying you dont actually have 100 spare each month to have a life?

Scoops

What I meant was I'd probably missed a few one off payments (like the posh hotel we've just been to for our joint bdays) so might be artificially in the green IYKWIM

My short term aims are to reduce the cc debt as my largest balance is 3700 to Barclaycard at 21% APR! I have just applied for an MBNA 0% card but they wanted me to call them to discuss. Is that normal?

FAs have all said we have no adverse credit and I have my credit reports from experian. Only thing of note is 2 late payments to barclaycard that meant they took me off the 0% 2 months early. Whoops! (but it was 15-16mths ago)

I also want to cut down the shocking £250 per month on groceries and we have started shopping at Netto more often. There's only 2 of us!


Edited to clarify:
Not been keeping a close eye on spending and have spent more than earnt for a while now (frittering it on crap)
If I leave out the frittering stuff which varies enormously then we theoretically have £300 each month spare. Never works in practice :S

inkie

Whats the £700 living expenses, and the groceries seem excessive - you could get both of these down (meal plan - check out the old-style board)and start and throw this spare cash at the cc debts - seeing as you are only paying the minimum amount. What are the APRs of the cc's? Would avoid getting more on the mortgage with this amount of debt. Could you not still move, but find something cheaper - different are perhaps.

Also, do you have any 'emergency funds' - perhaps you need to think about building these up as well, then you will have something to fall back on for situations like unexpected redundancy, and then not be running cards up even further.

kwisstan

Try doing a spending diary, that helped me find out where my paper surplus was disappearing, kept hitting overdraft when "on paper" should have had been OK!

I would also suggest posting your APRs for all the loans.

Having been bitten by putting other debt into a mortgage a few years ago, I would not suggest it. I'm still paying after the debt would have finished. Thanks to the site, I should be hopefully making inroads into that now.

Scoops

sorry, shameless bounce since I've updated with APRs.