Is it worth putting my Credit Card debt onto Mortgage

loulouloulou_2

Hi..

Can anyone help me?? i have wracked up £14000 in debts - my own fault, i know and im so working hard to clear it.

Someone told me about putting the crdit card debt onto my mortgage as the interest rate is much much less- would this work??
Has anyone got any other advice for me??

Thanks :eek: :eek: :eek: :eek: :eek: :eek:

MPH80

Someone told me about putting the crdit card debt onto my mortgage as the interest rate is much much less- would this work??
Has anyone got any other advice for me??

You have to do the maths on this.

£14000 on a credit card is a lot - especially if the debt is at 14.9% (or whatever).

But - if you put it into your mortgage, and you extend the term of the mortgage to do so, you are effectively paying off that £14,000 at 5 or 6% over 25-30 years - which can work out a lot more.

So - IF you add it to your mortgage, then you must not extend the term and must increase the amount you are paying in order to ensure you don't end up paying more.

M.

grumbler

Start with reading Martin's article: Where to Start with Problem Debts? . His advice is:

Remortgage: Mortgages are simply a special type of secured loan with cheaper rates. Borrowing the money on your existing mortgage, or remortgaging to a new cheaper deal, is often, though not always, the best move.

Remember, mortgage debts are paid off over a long time, and 5% over 20 years is more expensive than 10% over five years. Plus you may be forced to increase your life assurance and other associated costs if mortgage debts increase.

curly_cabbage

I have just paid my debts of by re-mortaging, i got a good rate 4.89 % (was 5.9 %) kept the life of the mortage the same and i can pay extre off each month upto 10% of the total min 0f £200, i completed in August and have made my first extre payment (£300) this month. Best of all the relief of having that debt off my shoulders is great, having a fresh start thats great too !

JohalaReewi

If you transfer the debt to the mortgage, would you be able to make overpayments without any penalties? If you can, you could roughly work out what you would have had to pay the credit card company per month then pay that much off the mortgage. That way you will clear the £14,000 debt faster and cheaper. For example, if the CC minimum repayments were running at £280 per month, you transfer the CC debt to the mortgage then overpay the mortage by £280 per month.

Or you could look at transferring the debt to credit card with a low 'life of balance' APR. See Martin's articles as suggested.

http://www.moneysavingexpert.com/creditcards

dennyboy

curly_cabbage wrote:

I have just paid my debts of by re-mortaging, i got a good rate 4.89 % (was 5.9 %) kept the life of the mortage the same and i can pay extre off each month upto 10% of the total min 0f £200, i completed in August and have made my first extre payment (£300) this month. Best of all the relief of having that debt off my shoulders is great, having a fresh start thats great too !

I Agree with Curly cabbage on this one! I think as long as you remortgage and you pay extra each month (remeber to get a mortgage which allows over payments) then you are quids in. Firsty, it gives you that breathing space, secondly, as long as you are not a complete idiot and go and pile up the debt again, then you have got yourself a cheap loan. It is secured on your property though! which is something to think about if you think you really might struggle paying. If you are stupid enough to build up the debts again, then no, this is not the way to go!
Just my thoughts...