Interest Only Mortgage To Clear Debts

getmore4less

DontWorryBeHappy wrote: »

You say £1600pm on £200k over 10 years, that's not possible
0% interest that would be £192k. B&B must be charging something? I would have expected something nearer £2kpm
These were/are estimates. We pay £1646.15 per month.

£200k/ (12 * 10) = £1667pm still not enough without interest

gone from over spending to min payments on relatively(3mnths net) small debt, not that serious a chat.
No holiday planned for the next two years or until we are debt free (excluding our mortgage). We have recently sold one of our two cars leaving us with an X reg Land Rover. We have cancelled our Sky subscription. I have given up smoking.

As I said it is upto you but It might be worth reviewing your priorities for the rest of your spends.

Personaly I would find other savings and go on holiday.

So where is the money going if not on these anymore.

After mortgage and debt repayment you are spending over £50k per year somewhere, thats £137 per day

Days on a cruise ships(for 2 people) can cost less than that.

getmore4less

DontWorryBeHappy wrote: »

You need to be sure if you change mortgage that you do it for a better rate than you have now. Missed payments will affect an application and may mean best rates not available.
I am paying an exceptionally good rate of interest on my mortgage. I think it is tracking at 1% above the Bank of England rate. However, I suspect that the BoE rates will not remain this low for much longer so it's all about the timing of when to shift.

You would be mad to give up this rate, chances are you won't see this for a long time, any new deal will cost more in the log run.

You could ask to extend the term to reduce payments.

Your mortgage still does not add up 1.5% £200k 10 years is £1796

Make it 20y and £966 so another £600 to throw at the CC debt, once that is gone shorten the term again.

DontWorryBeHappy

Therein lies the solution to your problem. Take action. There's an old saying from "Acorns Grow Oak Trees".
I assume you are suggesting that I should save this £2 a week rather than increase my chances of winning my way out of debt.

You have the analysis of your spending. Address your problem. Which can only be lifestyle if your income is as you say.
My problem HAS BEEN lifestyle. My problem now IS having to pay for the overspending of the last 10 years.

I'm not looking for sympathy just advice.

ViolaLass

You asked whether there is a better alternative. There is and we could advise you further if you could only explain what you are spending £4k a month on.

getmore4less

DontWorryBeHappy wrote: »

Therein lies the solution to your problem. Take action. There's an old saying from "Acorns Grow Oak Trees".
I assume you are suggesting that I should save this £2 a week rather than increase my chances of winning my way out of debt.

You have the analysis of your spending. Address your problem. Which can only be lifestyle if your income is as you say.
My problem HAS BEEN lifestyle. My problem now IS having to pay for the overspending of the last 10 years.

I'm not looking for sympathy just advice.

£20k over 10 years is an overspend of £5.50 a day.

I still think you should look at a 0% spend CC to reduce your interest costs.

If 1/2 your £137pd spends could be put on a 0% CC your £20k would be on 0% in less than a year and reduced by the £500pm you are already allocating to the CC.

Cheaper than delaying the mortgage.

DontWorryBeHappy

Seems to me that if you are serious about this you could cut down and pay off the credit cards in a few months.
There is no further substantial saving that we can make. All the savings that we have made (second car, cigarettes, gym membership, satellite tv, etc) have gone directly into the monthly amount repaybale on the cards.

If you go to interest only and it still takes you 2 years to pay off £20k on a £125k income then this doesn't seem to leave much margin for error. I would say you are still living close to your means.
Agreed, very close. The difference is that I am now trying to live within them.

After that you would still not have much left over to start paying off the mortgage. I wonder if you still have large outgoings that you are not willing to forgo.
I have two other personal loans, £383.01 and £396.29, that I pay each month and another £500 - £600 that goes towards my children's University education (rent). So it's not a case of being unwilling to forgo, it's a case of having no choice but to pay. Both loans have about 2 years of a 5 year terms to go and no payment has ever been missed on either of these loans.

Do you have prestige type things that you think look impressive and expensive but aren't all that useful? Prestige credit cards, clubs that you rarely visit
Not any more!

Some time ago (about 8 years) I reviewed all my outgoings from my current account and discovered £4k per year wasted. Insurance on things no longer owned, duplicate insurance, internet connections no longer there, subscriptions for things at previous addresses, and more importantly things I no longer had time or inclination to make use of.
Done !


I have friends that have been in a similar situation to you and think that economising is a short term thing to get out of debt and the first time attempted it has always failed as after a few months they think it is going well and can relax and take the expensive holiday or replace things in the home as a short term blip.
It is not going to be easy but it can not be any harder than the 36 days 21 hours and 12 minutes since my last cigarette.

getmore4less

We have recently sold one of our two cars

Is the £20k debt left before or after using the money from the car sold?

getmore4less

I have two other personal loans, £383.01 and £396.29,


So your unsecured debt is a lot more than the £20k.

why not include them in the debt free plan.

Looking at just one debt is not the correct thing to do.
read up about snowballing.

£6500 income
So we have
£1600 mortgage
£ 500 CC
£ 800 loans
£ 600 uni

£3000pm left to live on!

DontWorryBeHappy

ViolaLass wrote: »

You asked whether there is a better alternative. There is and we could advise you further if you could only explain what you are spending £4k a month on.

I was originally asking for advice on whether or not the Interst Only mortgage for 2 years was a good idea in order to pay off the credit card debt.

However, if it helps I will list all my expenditure within the next hour or so.

Burridge60

You have done the maths. But the loss of the very competitive deal with B and B would be a shame to pass up.

Securing more debt against your home is not to be encouraged. You do really need to tackle the credit cards head on rather than hide them as part of your mortgage.

Also very confused as to why they would be preferable on interest only unless you never want to pay them off ?