Remortgage or Struggle on....

moriarty888

I guess from the title you will know what my query is. I am interested in people's opinions on my present situation and options. I am in quite a fortunate position, in that I have a decent salary £37,500 (I work in central London, so it doesn't feel that much!):o . I have a £135,000 mortgage. However, I have £19,000 debt :eek: , with approximately £5,500 savings in a share ISA :j .

My mortgage deal is up, so do I add the debt to that and become debt free? I have spoken to my mortgage people and to add the debt of £13,500 to the mortgage would be about an extra £100 a month. At the moment I am paying about £530 a month servicing my various debts, not including trying to get rid of my overdraft, which is creeping up, so I need to take action now.

I have 21 years left to pay on my mortgage. I know I am very lucky, and many people on here don't have the luxury of these decisions, but I need to take action now, either by drastically cutting down for the next few years, or by adding the debt to the mortgage and then concentrating on saving money from my wages and paying off my mortgage in lump sums. Any advice very gratefully received.

A brief SOA;

Incomings;
Salary £2,149.78
Rent from lodger £400.00
Total £2,549.78

Outgoing
Council Tax £103.00
Gas £49.00
Electricity £10.00
Northern Rock £114.86 5.7% (£4,500)
Car Loan £157.42 0% (£1,250)
Barclays £150.00 0% till Jan 07 (£4,700)
Nationwide £115.00 4.9% (£3,600)
Lloyds overdraft (£4,200)
TV Licence £10.99
House Payment £50.00
Charity £13.00
Water £32.31
L&G Life !!! £17.80
BT £17.00
Mortgage £844.63
Bank charge £15.00
Train Pass £85.30
Mobile £35.00
Dental treatment £100.00

Total £1,920.28

Disposable £630.

The thing is, this £630 is being thrown at my overdraft, and there always seem to be other outgoings. My lodger is moving out and I have to get a shower put in for a new lodger, for which I'm being quoted about £2000. So, I feel I need to take the bull by the horns now, before I end up even more in debt.

Any advice gratefully received. I think I'm ready for it_pale_

Thanks in advance for taking the time to look at all this, I feel abit of a fraud, as I am in such a fortunate position.

joolz43

Having been in a similar situation myself, I would only remortgage if you are going to close all but one credit card and only use that for emergencies which are paid of each month. Other wise you will be back to square one (or worse) in 2-3 years.

rog2

Most people here will advise against borrowing your way out of debt, but, from what you say, it does seem a manageable situation.
However be carefull, as it can be only too easy to 'add' on to your mortgage. Will you run up more debt and, in another couple of years just add a bit more to the mortgage? Also, look at the total cost of adding to your mortgage - if your current debts are relatively short term, and you are managing them, how will the total payment, over 21 years, compare with total payment over current term?

moriarty888

Thanks for your quick responses. Having been on this site for a few weeks now, I feel that I am more than willing and able to give up the cards. In fact, i haven't actually used them for over a year, although the overdraft has grown.
I suppose that's what I'm worried about, for the first time in my life, I don't see this as free money, but as a very lucky opportunity to start saving. I have been quite frugal for a while. In fact all my friends think I'm great with money (what a joke!), but the odd "boiler blowing up", or lodger moving out situation, and I get back into debt. I want to actually have some savings to deal with these things for once.
Can I be trusted......

tomstickland

Using the savings to clear the largest rate cc debt and a bit of the next one.

£13,500 to the mortgage would be about an extra £100 a month

21 years x 12 months x 100 = £25K. So your £13.5K will cost you £25K to pay back over 21 years. Inflation will devalue some of this for you, but all the same, a long term loan will cost you a lot in repayments.

moriarty888

yes, I'm definitely going to cash the ISA in, which will clear my overdraft. With my outgoings though, I'm worried that it will just creep up again, especially with this flaming shower to put it. I have to keep my prospective lodger happy, otherwise I'd only have £230 to live on a month, and that doesn't go very far in London....

CLAPTON

it seems to me that if there are always 'other outgoings' you need to discover what they are and budget for them properly. otherwise once you remortgage you will simply run up these debts again.
and by the way 2000 for putting in a new shower seems absolutely rediculous even for london.

and what does dental at 100 per month involve?

you have a huge surplus ... where does it all go?

start to keep a spending diary and write down absolutely everything you spend.
once you have discovered where your money goes repost and see what best.

crawley_girl

And what is the £50 House Payment?

You haven't accounted for things such as food & petrol & going out...

:heartpuls CG :heartpuls

moriarty888

CLAPTON wrote:

and by the way 2000 for putting in a new shower seems absolutely rediculous even for london.QUOTE]

I know, £500 for the electrics, new bath and shower unit, then the walls have to be tiled, as it's a room with no windows, which is why there is no shower in it at the moment.

moriarty888

crawley_girl wrote:

And what is the £50 House Payment?

You haven't accounted for things such as food & petrol & going out...

:heartpuls CG :heartpuls

I have to pay £50 a month to the flat management company, so that's not negotiable. My £100 dentist, is for ongoing work, which should end in about 6 months time, but they let me pay per visit.

The £600 I have left every month covers food, going out, living expenses. I try to keep it down as much as possible (by following every tip I can find on here:o ) Then put the rest towards the overdraft, so if there isn't anything unusual, like a parking ticket :mad: I live on about £400 a month, for everything else.

CLAPTON

..... as i said you really ought to find out exactly where the money goes .. 600 is quite a lot really

also although its not a lot why are you borrowing money to pay 13 to charity?

and what benefits do you get for the 15 bank charges?

why do need car as i assume you go you work by public transport?.. although you have a car loan, i see nothing for car tax/insurance/RAC/AA/petrol /MOT /servicing?