Re mortgaging to pay off Credit Cards...

Raksha

current O/S amount on mortgage - £105,000, current O/s debt on credit cards - £25,000. Total re-mortgage required £140,000 to allow clearing of o/d and a 'bit in hand'. Current value of house approx £240,000. Total combined income £54,000, 2 dependants. I've been with my employer 2 years, OH with his 6. There were some 'hiccups' (a default of approx £250 with my Abbey bank account 4 years ago, before I started working, now partially settled) and a couple of late payments, but nothing of any consequence (according to both our bank when we approached them, and a Personal Financial advisor) but neither have been able to find an organisation who can help us so far. (HSBC and Coventry BS have been approached so far)

We're currently paying out about £1800 a month on mortgage and credit card payments, but hardly seeing the O/S CC debit being reduced at all, as well as having no spare cash for entertainment or 'rainy days'.

Does anyone have any advice?

crazybass

I would get yourself to the Citizens Advice Beurau and get them to sort out the credit cards issues.

They can normally take it on there behalf to contact them to give you some slack and set up an agreement to pay them off and stop the account and stop interest payments.

I did this many years ago (not sure if they still do it though)

Then you will know exactly what fixed costs you have.

_Andy_

What reasons where given for the HSBC and Coventry declines?

Raksha

_Andy_ wrote: »

What reasons where given for the HSBC and Coventry declines?

HSBC said "They have declined the application as they are not happy to consolidate the unsecured debt. In addition to this they said that with the default only just being settled and with some of the cards still in active use they are unable to assist you further." Makes no sense to us at all, surely if we can reduce our monthly outgoings and have them secured on our property we are in a better position to service the loan anyway - we've not used the CC for years, and would be quite happy to destroy them if necessary..

We've yet to hear the reasons from Coventry BS

Thrugelmir

Raksha wrote: »

HSBC said "They have declined the application as they are not happy to consolidate the unsecured debt.

You'll more than likely receive this response from the majority of lenders.

No easy answers. Other than getting to grips with your budget and reducing expenditure to a bare minimum to tackle your debts.

Suggest you pay a visit to the other MSE boards where more appropriate advice can be given, specific to your circumstances.

Raksha

Would it help at all to make the credit cards 'inactive'?

GMS

You wont be able to make the cards inactive without paying them off.

You may be able to get a mortgage but you are looking in the wrong places. HSBC will declien anything other than squeaky squeaky clean and Coventry are pretty much the same.

Speak to a 'Whole of Market' broker to see options.

Lenders are wary of debt consolidation loans especially if the credit facility is to remain as it could be used again in the future which may lead to mortgage arrears.

One question likely to be asked from all lenders will be 'Why is a small default of £250 only partially satisfied when you have income which should allow it to have been cleared in full?'

This together with unsecured debts of £25,000 could be taken as a sign of an inability to manage finances.

Raksha

It was a whole of market broker who suggested Coventry..... The default came to light with the credit check - we could probably pay it off if necessary, I was under the impression they had accepted a 'full and final settlement' and that no further action was necessary - I had been self employed and it was a business account only, so when the business folded I agreed a settlement figure.

GMS

Have you now obtained copies of your credit report from Experian and Equifax? If not you should do this to see exactly what is showing.

Paying of the default should be done but it may not help in the short term with some lenders. Some want it to be satisfored for a period of time.

Go back to your broker and see what they recommend for the next step. Be careful though as too many applications will cause you more harm than good.

Raksha

Update - we made one final enquiry through our broker to Cheltenham and Gloucester (he phoned them first to see what they thought before he put in an application) and they were happy to help us.

Thanks for all the advice and help.

Thrugelmir

Raksha wrote: »

I was under the impression they had accepted a 'full and final settlement' and that no further action was necessary - I had been self employed and it was a business account only, so when the business folded I agreed a settlement figure.

Means that the debt wasn't satisfied in full. So the "mark" on your credit ratingwas made as a warning to others.