Re mortgaging to pay off Credit Cards...

BadgerFace_2

This isn't what you want to hear, but putting all your debts onto your mortgage is not a brilliant idea to start with, but certainly not if you're considering taking extra cash and keeping the card accounts open. What are you going to do when you've spent your 'bit in hand' (more to the point, why do you need a bit in hand, if you've just free'd up all that cash from the CC repayments)?

It often doesn't work, but if you have to do it, keep it to the bear minimum you need and cut up all the cards...I'd also really start trying to live within your means before you end up with no equity in your property.

Raksha

Thanks for those points BF - we fully realise it's not been a clever move to let things escalate like this, and we certainly shan't be keeping the credit cards open and will be hopefully passing on this lesson to our kids as they certainly won't forget the past few years when we've been spending over £800 a month on interest alone to the credit cards whilst only clearing the bare minimum off the balances.

However - what is the difference between our situation, and a first time buyer with no credit cards and 60% LTV?

Thrugelmir

Raksha wrote: »

However - what is the difference between our situation, and a first time buyer with no credit cards and 60% LTV?

The FTB has demonstrated that they can handle their personal finances.

Statistically people who mishandle their personal finances. Are more than likely going to repeat their mistakes again in the future. Down to human nature and our genes.

BadgerFace_2

There's no difference at all, apart from you've worked very hard to get to the point where you have a nice amount of equity under your belts...you also need to work hard to keep it!

Thrugelmir

BadgerFace wrote: »

There's no difference at all, apart from you've worked very hard to get to the point where you have a nice amount of equity under your belts...you also need to work hard to keep it!

Not a dependance on rising house prices to fund an unsustainable lifestyle.

Releasing £25k to repay credit card debt is destroying that hard earned equity. As it still has to be paid back with interest. So less ability to save for that comfortable retirement.

Raksha

Thrugelmir wrote: »

The FTB has demonstrated that they can handle their personal finances.

Statistically people who mishandle their personal finances. Are more than likely going to repeat their mistakes again in the future. Down to human nature and our genes.

Didn't realise all FTB's came with a 'they know how to handle money' tag - I certainly didn't when I was a FTB, but I've learned from that mistake (unfortunately OH didn't listen to me..)

Thrugelmir

Raksha wrote: »

Didn't realise all FTB's came with a 'they know how to handle money' tag - I certainly didn't when I was a FTB, but I've learned from that mistake (unfortunately OH didn't listen to me..)

You quoted the example of FTB's with a 40% deposit......

Raksha

Thrugelmir wrote: »

You quoted the example of FTB's with a 40% deposit......

Yes - my deposit came from an inheritance.......

Thrugelmir

Raksha wrote: »

Yes - my deposit came from an inheritance.......

Many have to save hard to get on the first rung of the ladder.

wildfrog

Speak as someonw who have got this very wrong in the past....

Putting your cc debts into your mortgage can make them a lot more expensive in the long term as you are borrowing that money over the term of your mortgage, therefore paying interest over the term of your mortgage (eg 3% on £25k over 25years is a lot of interest!)
So all you now have dramatically reduced your outgoings ensure you overpay your mortgage accordingly so you aren't loosing the money in interest payments, and get back some of the equity you have lost.

Good luck!