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Could a secured loan be the way for us?

carriel_2
Posts: 186 Forumite
I've been reading through all of Martins info on Secured Loans this morning & i know they are evil & it would be increasing my debt at a high interest rate, but i'm wondering if we might be one of the small % that these loans are actually good for?
I'll do my best to explain, we've been struggling for nearly a year, & now have a DMP, we owe about £12000, but if we were to contact & ask for full & final settlement figures for them all I think we could bring it down to about £8000. We have lots of equity available in the house, so thats not a problem. We have tried to get an unsecured loan at a low rate, but got turned down, we wont be accepted for a credit card.
I really want to continue down the DMP path (swapping to cccs) as it means we can pay everything off more quickly BUT
My husband is in line for a directorship end of next year, this is a big step for him & after he has been a director for a year, he is going to take over the company. This means we will need to move house, we're planning around Dec 08, we will need a new mortgage or we'll need to rent privately.
If we start a secured loan, then our black marks against our credit record will stop & in two years we should be able to get a new mortgage no probs, but if we are still in the DMP or recently finished, then this info will flag up when the mortgage companies do credit checks.
We would continue to live the DFW way & put all extra money into investments, then after the two years when we move we could pay alot (maybe even all) off of our secured loan.
I'm in two minds & would really appreciate input, I want to stay with the DMP & just keep throwing money at our debts, but I also need to think about whats best for our future plans, my husband has worked so hard to get to this point in his career, I need to do everything I can to ensure there arent any problems.
I'll do my best to explain, we've been struggling for nearly a year, & now have a DMP, we owe about £12000, but if we were to contact & ask for full & final settlement figures for them all I think we could bring it down to about £8000. We have lots of equity available in the house, so thats not a problem. We have tried to get an unsecured loan at a low rate, but got turned down, we wont be accepted for a credit card.
I really want to continue down the DMP path (swapping to cccs) as it means we can pay everything off more quickly BUT
My husband is in line for a directorship end of next year, this is a big step for him & after he has been a director for a year, he is going to take over the company. This means we will need to move house, we're planning around Dec 08, we will need a new mortgage or we'll need to rent privately.
If we start a secured loan, then our black marks against our credit record will stop & in two years we should be able to get a new mortgage no probs, but if we are still in the DMP or recently finished, then this info will flag up when the mortgage companies do credit checks.
We would continue to live the DFW way & put all extra money into investments, then after the two years when we move we could pay alot (maybe even all) off of our secured loan.
I'm in two minds & would really appreciate input, I want to stay with the DMP & just keep throwing money at our debts, but I also need to think about whats best for our future plans, my husband has worked so hard to get to this point in his career, I need to do everything I can to ensure there arent any problems.
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Comments
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A few things that you need to be well aware of.
1. Paying off secured loans early incurrs MASSIVE charges. A user whos not about at the mo LennyMFO was stung for over 20 grand if I remember correctly, and there seems no way of claiming this back as an unfair charge.
2. you can very seldom overpay secured loans without again some sort of penalty.
3. I thought that directorships were only in jeaopardy in bankrupcy, not DMPs or IVAs, does anyone know more about this
4. if you are on a DMP now you are not paying interest, on a secured loan you will be.
Renting a place really is not the end of the world, a few of us on here are selling up for general money SAVING and renting for a while, releasing the equity and living somewhere cheaper. Yes, renting has drawbacks, but why not just sell where you are now and rent for a while.
Do the maths and then run it by us, once weve seen the figures we can see..
Ie your house is *worth* ( bearing in mind lots of uncertainty in the housing market)
You have paid off your mortgage x amount
you want to borrow X amount
how much the interest, arrangement fees, closing the loan off early all associated fees/charges/interest
then we can see for sure.
My gut feeling from seeing so many people coming on here with nightmare secured loans problems is that they are the worst idea in the world.:beer: Well aint funny how its the little things in life that mean the most? Not where you live, the car you drive or the price tag on your clothes.
Theres no dollar sign on piece of mind
This Ive come to know...
So if you agree have a drink with me, raise your glasses for a toast :beer:0 -
Right, my figures are: Mortgage £108,000, property value £160,000 debts amount to take on secured loan approx £8000.
I dont mind renting, I'm just worried that if we were still in a DMP we wouldnt be able to pass the credit scoring. This is the worry with changing mortgage too.
I wasnt planning on overpaying on the secured loan, but paying off at the end of the two years (hopefully) I'm aware we will incur a charge for this, but according to the info I have read, on new loans, they are not allowed to charge more than two months interest, unless the loan is over £25,000.
I would love to know more about the Directorship position if anyone has any info? One of our creditors has applied to the courts & I'm worried that CCJ's will be a problem with the directorship.
Set up fees etc I really dont know at the moment, i'm still in the 'idea' phase.0 -
No problems with directorship and CCJ, DMP or IVA. Just Bankruptcy. You cannot be a director of a company if you are undischarged bankrupt.
If you are thinking of moving why don't you settle your DMP with the equity at that point. As far as I can see a secured loan would be a backward step to paying interest you don't need to.
I don't think that the courts will be interested in CCJ etc as you have a DMP which is the same as what the courts would award. Let your creditors try, it may go in your favour.
Good Luck.
LouiseNobody is perfect - not even me.0 -
Carriel
Am I mistaken?, I thought you had already posted your SOA on here already, and you already have a secured loan of £19,000 with First National Home Finance Ltd, I personally would not recommend another based on what lynz has said, furthermore, why not check with First National what the settlement figure would be if you were to settle, I am sure you would be shocked. I would stick with your DMP because if you borrowed more and went bankrupt then you husband could never become a director in the time frame you have in mind. Deal with the here and now and wait to see what the future may bring.
AMDDebt Free!!!0 -
Thanks guys, I have already requested a redemption statement, but on the phone I was told we are now under £8000, which is alot less than I thought. So thats one bit of good news this week!
Jellycat, thank you so much for that information, I really dont want to take out the secured loan, but I need to know that I am doing the right thing to ensure my husbands future is sound.
I think Kensington really put the frightners on me yesterday, my head has been in a thousand different places since.
I will stick to my original plan, cancel standing order with Kensington, give them their notice, get DMP set up with CCCS next week & just carry on throwing money at the debts till they are all gone(hopefully within 2 years).
Anyone know where I stand trying to get a new mortgage if the DMP is still in place when we need to move? Or whether we would be able to rent privately with the DMP in place or recently finished?0 -
when you first posted your SoA it seemed to me that you could just about pay the debts back without a DMP... have you revised your SoA since then. also i think i remembered you were trying to get a job once your child started school ...has this worked out?
why not repost your revised SoA so we can have another look at things before rushing inot getting a new loan.0 -
Carriel
How much debt are you in at the moment?
Will the secured loan be paid off when the house is sold ( eventually) if not before
How much debt is in the DMP?:beer: Well aint funny how its the little things in life that mean the most? Not where you live, the car you drive or the price tag on your clothes.
Theres no dollar sign on piece of mind
This Ive come to know...
So if you agree have a drink with me, raise your glasses for a toast :beer:0 -
Our SOA is unchanged for the moment, It will be another 6 ot 7 weeks before I can start work, as my youngest will be doing part time for the first term, I have however taken on an Avon round & have advertised for babysitting, so i'm hoping I can make at least a little money this month.
Unsecured debts are £12000 approx, this is all in the DMP with Kensington (soon to be moved to CCCS)
the secured loan that we currently have will be paid off when we sell, as will anything else we still owe at that time.0 -
Another thought, its not ideal, but what do you think of the idea of selling our house & moving into rented for a while? We're going to be moving out of the area in a couple of years anyway, we could maybe rent near MIL as she has offered to take my kids to school & pick them up if I want to return to work full time.
We could pay off all of our debts right now & live without debt or worry for 2 years, maybe put any money we have left after the sale into an ISA for when we move?0 -
carriel wrote:Our SOA is unchanged for the moment, It will be another 6 ot 7 weeks before I can start work, as my youngest will be doing part time for the first term, I have however taken on an Avon round & have advertised for babysitting, so i'm hoping I can make at least a little money this month.
Unsecured debts are £12000 approx, this is all in the DMP with Kensington (soon to be moved to CCCS)
the secured loan that we currently have will be paid off when we sell, as will anything else we still owe at that time.
So if all your debts will be settled by that time ( if not beforeon selling, theres no need to worry about if you are renting with a DMP, as surely it will have been closed down ( ish) by that time?
You could always pay a few months in advance for the landlord to prove you have cash:beer: Well aint funny how its the little things in life that mean the most? Not where you live, the car you drive or the price tag on your clothes.
Theres no dollar sign on piece of mind
This Ive come to know...
So if you agree have a drink with me, raise your glasses for a toast :beer:0
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